While UTStarcom Touch Diamond appeared in a rumor for Verizon Wireless, the company announced that it has reached an agreement to sell its Personal Communications Division (“PCD”) to a newly formed entity controlled by AIG Vantage Capital, a part of AIG Investments. The expected proceeds of approximately US$240 million will be based primarily on the net working capital levels, subject to certain adjustments. In addition to the cash consideration, UTStarcom could also receive up to US$50 million based on a three-year earn out provision.
The PCD business, which primarily distributes handsets and related accessories in North America, will be called Personal Communications Devices, LLC and will be led by PCD’s current management team. The Handset business unit of UTStarcom will continue to design and provide devices to be sold in the Americas through Personal Communications Devices, LLC as part of a supply agreement. UTStarcom will also sell devices directly to carriers in other areas of the world.
Philip Christopher, the president of UTStarcom’s PCD, stated, “Operating as a standalone business will afford the new company greater distribution and financial flexibility and better positions us to capitalize on emerging market trends and strategic growth opportunities. We will continue distributing handsets and accessories throughout North America, and we remain focused on providing our current manufacturing partners and carrier customers outstanding support and service.”
