KVH Industries has sold its maritime training business, Videotel, for US$90M to focus on unveiling its new maritime internet-of-things (IoT) connectivity solutions.
Oakley Capital is purchasing Videotel, with its e-learning and video-based training technologies and commercial maritime penetration, on a cash-free, debt-free basis, subject to working capital adjustments.
KVH chief executive officer Martin Kits van Heyningen said the sale provides finance to invest in maritime IoT solutions, accelerate roll-out of VSAT service, AgilePlans, and to commercialise photonic integrated chip technology for use in autonomous vehicles.
“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,” said Mr Kits van Heyningen.
“We intend to use the net proceeds of the sale to invest in three key growth initiatives, which we expect will drive significant value creation, and to reduce our debt.”
KVH will have funds to manufacture thousands of Ku-band maritime satellite terminals for its AgilePlans connectivity-as-a-service programme that provides seafarers with internet access, voice services and shipowners with data transmission solutions.
It will finalise development of IoT connectivity that will be launched this year over its high-throughput VSAT network, which connects more than 9,000 vessels worldwide.
“Our strategic approach has evolved to focus on faster-growing markets that we believe will produce greater long-term shareholder value,” said Mr Kits van Heyningen.
He said the Videotel sale will not impact delivery of remote learning services on ships.
“To maintain continuity for KVH’s AgilePlans customers, KVH has retained certain rights to continue including the Videotel training content with the AgilePlans programme,” he said.
The base purchase price of US$90M is 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.
It intends 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 12 months to 31 March 2019, Videotel’s revenue was US$17M and its operating income was US$3.1M.
KVH acquired Videotel in 2014 to expand the media content it could offer over its VSAT services and to gain greater penetration into the commercial maritime sector.
It incorporated Videotel media into its IP-MobileCast service that transfers content over VSAT to ships. This content includes news, sport, films and training video.
KVH manufacturers its own VSAT antennas. In April, KVH unveiled its new TracPhone V11-HTS maritime antenna that connects to geostationary satellites in both Ku-band and C-band with a 1-m diameter reflector. KVH introduced HTS versions of its other antennas in 2018, including a 60-cm diameter, Ku-band TracPhone V7-HTS and 37-cm diameter, Ku-band TracPhone V3-HTS.
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