KVH Unloads Videotel for $90m

May 13, 2019

Martin Kits van Heyningen, chief executive officer of KVH. Photo: KVH
Martin Kits van Heyningen, chief executive officer of KVH. Photo: KVH

KVH Industries, Inc., (Nasdaq: KVHI) sold its maritime training business, the Videotel group of companies, to an affiliate of Oakley Capital for a base purchase price of $90 million, on a cash-free, debt-free basis, subject to working capital adjustments. 

The Videotel group of companies includes Super Dragon Ltd., Videotel Marine International Ltd., Videotel Training Services Ltd., Videotel Consultants and Rentals Ltd., Videotel Marine Asia Ltd., and Videotel Pte Ltd.

“As part of our long-term strategic roadmap, we are focusing on the large and growing markets of our core mobile connectivity and inertial navigation businesses,” says Martin Kits van Heyningen, chief executive officer of KVH.  “We intend to use the net proceeds of the sale to invest in three key growth initiatives that we expect will drive significant value creation, as well as to reduce our debt.  Specifically, we plan to invest in the development and commercialization of our photonic integrated chip technology for use in autonomous vehicles and other commercial and military platforms, to support the further acceleration of our AgilePlans (Connectivity as a Service) program, and also to finalize the development and launch of our IoT connectivity solution.  Videotel helped us to penetrate the commercial maritime markets initially, but our strategic approach has evolved to focus on faster growing markets that we believe will produce greater long-term shareholder value.”  

To maintain continuity for KVH’s AgilePlans customers, KVH has retained certain rights to continue including the Videotel training content with the AgilePlans program.

The base purchase price was $90 million, subject to adjustment for Videotel’s cash, indebtedness, and working capital.  KVH expects to receive payment of the purchase price within 30 business days, subject to subsequent adjustment for working capital.  Payment of the purchase price is secured by a charge (a type of foreign security interest) over the shares of Super Dragon Limited and Videotel Marine Asia Limited, and is further backed by an equity commitment letter from Oakley Capital IV Master SCSp, Oakley Capital’s fourth and newest fund that has recently raised in excess of €1 billion of capital commitments.

KVH expects to use a portion of the net proceeds of the sale to repay the full balance of its outstanding term loans and a substantial portion of outstanding borrowings under its revolving credit facility.

For the last 12 months ending March 31, 2019 Videotel’s revenue was $17.0 million and its operating income was $3.1 million.  Depreciation and amortization for this period was $4.8 million, and equity compensation was $0.1 million.

Logistics News

Ship Design, Maritime Accidents and There’s a Master on the Run

Ship Design, Maritime Accidents and There’s a Master on the Run

Maersk: Effective US Tariffs Average Around 21% Currently

Maersk: Effective US Tariffs Average Around 21% Currently

US Grain Shipments Surge 9% in face of Chinese Tariffs

US Grain Shipments Surge 9% in face of Chinese Tariffs

Great Lakes Limestone Trade Up in June

Great Lakes Limestone Trade Up in June

Subscribe for Maritime Logistics Professional E‑News

Homeland Security reports eight migrants were deported to South Sudan from Djibouti.
Mayor of Moscow: Russian air defences shot down four drones heading for Moscow
US Air Force suspends SpaceX project on Pacific atoll report says