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Blog Coverage Mitel Networks Divests Mobility Business for $350 million in cash, a $35 million Promissory Note, and an Equity Investment in the Purchaser

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LONDON, UK / ACCESSWIRE / December 20, 2016 / Active Wall St. blog coverage looks at the headline from Mitel Networks Corp. (NASDAQ: MITL) as the Company announced on December 19th, 2016, that it has entered into a definitive agreement to divest its mobile division to the parent company of Xura, Inc. for $350 million in cash, a $35 million non-interest bearing promissory note and an equity interest in Sierra Private Investments L.P., the limited partnership that will own both Xura and the mobile division. The cash portion of the purchase price is subject to adjustments for closing working capital and indebtedness. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Mitel Networks' competitors within the Communication Equipment space, Comtech Telecommunications Corp. (NASDAQ: CMTL), reported on December 07, 2016, its operating results for the first quarter ended October 31, 2016. AWS will be initiating a research report on Comtech Telecommunications in the coming days.

Today, AWS is promoting its blog coverage on MITL; touching on CMTL. Get all of our free blog coverage and more by clicking on the links below:



The Deal

The sale of the Mobile division is expected to close in the first quarter of 2017, subject to regulatory approvals and other customary closing conditions. The transaction is not subject to any financing condition. Mitel stated that the cash proceeds from the sale will be used to pay down the Company's existing credit facility, which will support in reducing its gross leverage ratio from 3.3x to 1.8x, and net leverage to 1.3x on a pro-forma basis. As a result of the divestiture, Mitel expects to record a significant write-down of goodwill relating to the transaction in Q4 2016.

Back in March 2015, Mitel had acquired Mavenir Networks of Dallas, a leader in 4G LTE mobile solution, for $560-million in cash and shares. The acquisition was completed on April 29, 2015. The move was considered as an opportunity for the Company to expand into the mobility business and to tap into the 5G wireless technology.

Strategic Decision

Mitel's announcement of divestiture of its mobility business reflects a strategic decision made during the Company's recent annual business review. During that event, the Company decided to monetize the mobile business and focus exclusively on the Unified Communications and Collaboration (UCC) market, which will provide opportunity to grow as the digital transformation across the globe is accelerating demand for cloud-based business communications solutions.

Commenting on the deal Rich McBee, CEO of Mitel stated:

"In a period of rapid change and massive technology transitions, scale and focus are key to driving growth and shareholders' return. This transaction will allow Mitel to achieve these goals."

He added that:

"It also enables us to intensify our focus and capital in expanding our leadership position in the enterprise market as it prepares for large scale digital transformation of premise-based systems to the cloud. Employees and customers of the mobile division will benefit by being part of a large carrier-focused company with the size, scale and support infrastructure needed to truly compete for and drive the next wave of 4G/5G innovation."

Mitel stated that post-completion of the mobile division's sale, the Company will be significantly de-levered, and will have a number of meaningful options available to generate shareholder value. Mitel stated that its shares are substantially undervalued and as a result, the Company intends to implement a share buyback program in conjunction with a full evaluation of its capital structure. The Company is expected to make an announcement in the near future.

Mitel's Board of Directors has approved the sale of the Mobile division - subject to regulatory approval - as well as a share buyback program.

Stock Performance

At the closing bell, on Monday, December 19, 2016, and following the announcement, Mitel Networks' stock dropped 5.26%, ending the trading session at $7.02. A total volume of 791.43 thousand shares were traded at the end of the day, which was higher than the 3-month average volume of 292.30 thousand shares. In the last month and previous six months, shares of the company have advanced 1.01% and 7.34%, respectively. The stock currently has a market cap of $832.57 million.

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SOURCE: Active Wall Street