Volt Information Sciences sells its Computer Systems segment to NewNet Communication Technologies
Volt’s Computer Systems segment provides cloud-based contact center services, voice self-service applications, and database software and services to organizations around the world. NewNet is a global provider of solutions for next generation mobile technologies worldwide that includes Mobile Messaging and Interactive Voice Response (IVR) platforms.
“This sale is the third and most significant divestment or exit of a non-core business Volt has executed in the past twelve months. As we have communicated to investors throughout 2014, our primary goal is a more highly focused and profitable Volt. We are aligning our portfolio of businesses around staffing and services with similar profitability, risks, and returns on capital. Today's announcement reflects this strategy we are divesting a business with significant upfront software development capital investment and an extended payback period that is much different than our core business. NewNet Technologies is better positioned to integrate this business into its existing Mobile and IVR platforms, and expand their telecom services to additional geographies and customer groups in a more profitable manner,” said Ron Kochman, President and Chief Executive Officer of Volt Information Sciences, Inc.
Mr. Kochman continued, “investors will be able to assess more clearly the company’s value, capital needs, and expected returns to shareholders as a result of our alignment of our business portfolio around staffing and services. The annual profitability and cash flow savings from the businesses we exited this year of over $20 million will enable us to provide returns to shareholders, reinvest in our core world-class staffing businesses and expedite the reshaping of our business to generate greater long-term shareholder value.”
The proceeds of the transaction are a $10 million note bearing interest at one half percent (0.5 percent) per year due in 4 years and convertible into a capital interest of up to 20% in NewNet. Volt may convert the note at any time and is entitled to receive early repayment in the event of certain events such as a change in control of NewNet. The proceeds are in exchange for the ownership of Volt Delta Resources, LLC and its operating subsidiaries, which comprise Volt's Computer Systems segment, and payment of $4 million by Volt during the first 45 days following the transaction. An additional payment will be made between the parties based on the comparison of the actual transaction date working capital amount to an expected working capital amount of $6 million. In addition, Volt will incur severance and related costs associated with the sale of approximately $1 million.
To ensure a smooth transition for customers, Volt and New Net have entered into a Transitional Services Agreement for varying support services.