Metalink has entered into a definitive asset purchase agreement to sell its wireless local area network (WLAN) business to Lantiq, a newly-formed fabless semiconductor company funded by Golden Gate Capital, for up to $16.9m in cash.
The company said, $5.7m will be paid with the closing of the transaction and up to $1.2m (subject to downward adjustments) will be paid on March 31, 2010 and $2m to be paid in four installments throughout the year 2010. In addition, earn-out payments of up to an aggregate of $8m, contingent upon the acquired business’s achievement of specified performance targets through March 2012.
In conjunction, the company has entered into an amendment to its loan agreement with an institutional investor, under which the repayment of the $4.3m originally due upon the closing of the Lantiq transaction will be reduced to $4.1m and repaid in four installments, which include $3.75m at closing and the remainder in three installments by March 31, 2011.
On the closing of the transaction, the company intends to utilise its improved balance sheet and cash flow from the earn-out payments to explore opportunities synergetic with its expertise and industry relationships.
Yuval Ruhama, chief financial officer of Metalink is expected to leave the company concurrently with the closing, but will continue serving the company as a consultant through the end of 2010.
Tzvika Shukhman, CEO of Metalink, said: We are pleased that the strategic process we initiated last year has, despite our difficult financial situation and during an extremely challenging general market conditions, produced a transaction that is in the best interests of Metalink and its shareholders, as well as its employees and customers.
