ELK GROVE VILLAGE, Ill., May 04, 2023 (GLOBE NEWSWIRE) — SigmaTron International, Inc. (NASDAQ: SGMA), an digital manufacturing companies supplier (“EMS”) (“Company”), right now introduced that on April 28, 2023, it reached an settlement with its secured lenders going ahead and offered a majority place of its wholly owned subsidiary, Wagz, Inc. (“Wagz”). As beforehand reported on March 20, 2023, through Form 8-Ok, through the preparation of the Company’s third quarter monetary statements, it was decided that up to date projections resulted in a triggering occasion for the Company’s goodwill and long-lived asset teams. Under GAAP, the evaluate resulted within the Company concluding that the carrying quantities for the goodwill and long-lived asset teams had been impaired, and the Company would incur non-cash impairment costs of roughly $23.1 million. These impairment costs coupled with Wagz’ working losses resulted within the Company’s failure to take care of sure monetary covenants and ratios imposed by, and consequently triggered occasions of default underneath, the Company’s credit score agreements with J.P. Morgan Chase Bank, N.A. and TCW Asset Management Company, as Administrative Agent (“Secured Lenders”). Subsequent to that report on Form 8-Ok, on March 27, 2023, the Company reported receiving a delinquency notification letter from Nasdaq indicating that the Company was not in compliance with the continued itemizing necessities of Nasdaq for failing to well timed file the Company’s Form 10-Q for the fiscal quarter ended January 31, 2023. This notification additionally constituted a default underneath our credit score agreements with our Secured Lenders.
During fiscal yr 2023 Wagz was within the strategy of growing three new merchandise that had been scheduled to be launched through the center of calendar yr 2023. Sales of current merchandise throughout this growth interval didn’t materialize to expectations and resulted in a considerably greater stage of losses and money consumption than anticipated. Sales had been negatively impacted by a scarcity of components for manufacturing for a number of months, leading to lacking the vacation season for gross sales, a slowing financial system referring to inflation and a slower than anticipated acceptance of the product by the market. Thus, when projections had been up to date, it was decided that there was an impairment, as mentioned above.
Since figuring out the default, the Company negotiated with its Secured Lenders to succeed in an settlement to settle the occasions of default. As a results of negotiations with the Secured Lenders, whereas the core EMS business remained sturdy, it was determined that the Company would wish to exit the Pet Tech business that was performed via Wagz. The resolution that was reached was the sale of 81% of Wagz to Vynetic, LLC, which might turn into the bulk shareholder of Wagz. The Company would retain a 19% possession place in Wagz as a passive investor at closing. The Company would offer a $900,000 working capital mortgage to Wagz through the month of April and through which era Vynetic, LLC would elevate capital to assist Wagz going ahead. That transaction closed on April 28, 2023, and is efficient as of April 1, 2023. Under the transaction, the Company has no additional monetary obligations or necessities to Wagz going ahead past the preliminary working capital mortgage. The Company agreed to work with Wagz as an EMS supplier pursuant to a producing settlement however didn’t decide to extending any additional monetary assist. The Company expects that the transaction will permit it to probably get better a few of the belongings that it’s going to write off as of April 30, 2023 (Fiscal Year End).
In conjunction with the transaction, the Secured Lenders have agreed to waive all covenant violations and occasions of default underneath our credit score agreements via March 31, 2023. In addition, the agreements have been amended going ahead underneath phrases that the Company believes will assist its EMS business. With all such covenant violations and occasions of default being waived and with amended agreements in place, the Company believes it’s now ready to finish its third quarter monetary statements and file its Form 10-Q previous to the Nasdaq compliance deadline of May 22, 2023. Once that report is filed, the Company will work on its fourth quarter and monetary yr monetary statements and presently expects that these can be well timed filed.
Gary R. Fairhead, Chairman and Chief Executive Officer, stated, “During this period, the Company’s EMS business has remained robust. We have seen some modest signs of a slowing economy and continue to experience supply chain shortages. However, at this time, we are cautiously optimistic that the revenue volume will continue, and we expect to add additional business based on the opportunities we are working on at this time. Regarding Wagz, we believe that the opportunities they are pursuing in the Pet Tech market remain attractive and we are hopeful that our continuing minority ownership interest in the company will yield benefits to the Company in the future. The Company is thankful for the support of its Secured Lenders and for working with the Company as it worked through this transition.”
About SigmaTron International, Inc.
Headquartered in Elk Grove Village, Illinois, SigmaTron International, Inc. now operates in a single reportable phase as an unbiased supplier of digital manufacturing companies (“EMS”). The Company consists of printed circuit board assemblies, electro-mechanical subassemblies and utterly assembled (box-build) digital merchandise. SigmaTron International, Inc. and its wholly-owned subsidiaries function manufacturing amenities in Elk Grove Village, Illinois; Acuna, Chihuahua, and Tijuana Mexico; Union City, California; Suzhou, China, and Biên Hòa City, Vietnam. In addition, the Company maintains an International Procurement Office and Compliance and Sustainability Center (“IPO”) in Taipei, Taiwan. The Company additionally supplies design companies in Elgin, Illinois, U.S.
Forward-Looking Statements
Note: This press launch comprises forward-looking statements. Words equivalent to “continue,” “anticipate,” “will,” “expect,” “believe,” “plan,” and comparable expressions establish forward-looking statements. These forward-looking statements are based mostly on the present expectations of the Company. Because these forward-looking statements contain dangers and uncertainties, the Company’s plans, actions and precise outcomes might differ materially. Such statements needs to be evaluated within the context of the direct and oblique dangers and uncertainties inherent within the Company’s business together with, however not essentially restricted to, the dangers inherent in any merger; the Company’s continued dependence on sure important prospects; the continued market acceptance of services and products provided by the Company and its prospects; pricing pressures from the Company’s prospects, suppliers and the market; the actions of rivals, a few of which can have higher monetary or different sources than the Company; the variability of the Company’s working outcomes; the outcomes of long-lived belongings and goodwill impairment testing; the power to realize the anticipated advantages of acquisitions in addition to the bills of acquisitions; the gathering of aged account receivables; the variability of the Company’s prospects’ necessities; the influence of inflation on the Company’s working outcomes; the provision and cost of mandatory parts and supplies; the influence acts of struggle could should the availability chain; the power of the Company and its prospects to maintain present with technological adjustments inside its industries; regulatory compliance, together with battle minerals; the continued availability and sufficiency of the Company’s credit score preparations; the prices of borrowing underneath the Company’s senior and subordinated credit score amenities, together with underneath the speed indices that changed LIBOR; the power to fulfill the Company’s monetary and restrictive covenants underneath its mortgage agreements; adjustments in U.S., Mexican, Chinese, Vietnamese or Taiwanese laws affecting the Company’s business; the turmoil within the international financial system and monetary markets; the unfold of COVID-19 and variants which has threatened the Company’s monetary stability by inflicting a lower in client revenues, precipitated a disruption to the Company’s international provide chain, and precipitated plant closings or decreased operations thus decreasing output at these amenities; the continued availability of scarce uncooked supplies, exacerbated by international provide chain disruptions, mandatory for the manufacture of merchandise by the Company; the soundness of the U.S., Mexican, Chinese, Vietnamese and Taiwanese financial, labor and political methods and circumstances; international business disruption attributable to the Russian invasion in Ukraine and associated sanctions; foreign money trade fluctuations; and the power of the Company to handle its progress. These and different components which can have an effect on the Company’s future business and outcomes of operations are recognized all through the Company’s Annual Report on Form 10-Ok, and as danger components, could also be detailed every so often within the Company’s filings with the Securities and Exchange Commission. These statements converse as of the date of such filings, and the Company undertakes no obligation to update such statements in mild of future occasions or in any other case until in any other case required by legislation.
For Further Information Contact:
SigmaTron International, Inc.
Gary R. Fairhead
1-800-700-9095
