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magazineVislink lifeline in doubt
Uncertainty surrounds Vislink’s (VLK:AIM) sale of its Vislink Communications Systems (VCS) business. The proposed buyer, NASDAQ-listed XG Technology (XGTI:NDQ), has asked to change the terms of the $16m acquisition.
While the agreed price remains the same, instead of receiving the full $16m in cash, the revised deal will see Vislink receive an immediate $6.5m slug in cash with the additional $9.5m paid in the form of loan notes. These would be redeemable within 45 days of completion.
The change in payment terms appears to confirm doubts about XG’s own funding arrangements and its ability to meet the cost of the VCS deal, first expressed in Shares on 27 October 2016. ‘XG Technology is far from financially sound, with 2016 revenues of $3.7m (based on annualised first quarter figures) and losses of $17.6m,’ we wrote then.
‘This latest announcement suggests that the saga may yet take further twists and turns, as the terms of the loan notes have yet to be agreed, and Vislink will also need to seek shareholder approval for the revised conditions,’ points out Philip Carse, an analyst at research group Megabuyte.
It would be a massive blow if the deal falls through given its scope to effectively repair Vislink’s own stretched balance sheet. The market is worried, hence the 6.5% slump in the share price to 16.25p.
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