Telit Communications jumps on $105m sale of automotive business

(Sharecast News) - Telit Communications climbed on Wednesday after completing the sale of Telit Automotive Solutions NV (Telit Belgium) to TUS for a total consideration of $105m.The company said that, in exchange for the sale of Telit Belgium and its wholly owned subsidiaries in France, Germany, Korea and Israel, it has received $67.5m in cash, including $1m on account of the cash and working capital position of the disposed business, and has granted TUS a short-term vendor loan of $38.5m.TUS has proposed to repay the loan in full upon completion of certain bank financing that is currently in the final stages of being negotiated and is obliged to repay within six weeks of the completion date or a later date agreed to by Telit.Paolo Dal Pino, executive chairman of Telit, said: "This transaction is an important milestone in executing our strategy and it frees up considerable internal resources and provides significant cash inflow. The temporary Vendor Loan arrangement has enabled us to immediately complete this transaction."The assets and 120 employees of the Telit Belgium business, which represented less than 20% of the AIM traded company's revenue, will transfer with the sale.Cash proceeds from the sale have been used to repay in full the AIM traded company's bank debt and strengthen its cash position."We now have the financial flexibility and the resources to accelerate the integration of our hardware products and IoT services and can focus on enhancing value for our customers and shareholders," said Dal Pino.Telit Communications' shares were up 8.20% at 129.08p at 1311 GMT.