Belden Inc. is purchasing the assets of CDT's NORCOM wire and cable business.
The NORCOM operation is based in Kingston, Ontario. NORCOM is a division of NORDX/CDT, a Canadian subsidiary of CDT.
Belden www.belden.com, based in St. Louis, Mo., will purchase the accounts receivable, inventory, and equipment and will assume the accounts payable and certain other current liabilities of NORCOM, for approximately $11.3 million. The transaction is expected to close on or around Oct. 31.
"This acquisition strengthens our presence in the North American market and further positions Belden to benefit when our communications customers resume a more customary level of spending for their vast installed copper network," says C. Baker Cunningham, president of Belden. "Belden will take advantage of cost reduction opportunities and we expect that we can make this business a positive contributor in early 2003."
NORCOM occupies a plant of approximately 500,000 square feet and employs about 300 people. The business produces cable for the communications industry, including outside plant, central office and exchange cable. Its customers include Bell Canada and other telecommunications system operators and distributors in Canada and the United States.
NORCOM had revenues of approximately $50 million in the last 12 months, down from $100 million in the prior year.
"This transaction presented an opportunity to exit a business where we had a very small market share and that was not strategic in our long-term plan," says Fred Kuznik, CDT's CEOP. "The transaction will result in a pre-tax loss of approximately $45 million on the sale in our first fiscal quarter ending Oct. 31, which would be improved by the receipt of the contingent payment of approximately $8.1 million. The cash received from the sale will be used to reduce bank debt and other liabilities."
"This business has, during the prior fiscal year and recently, been in a loss position due to our small market share, inability to achieve synergies with other CDT businesses, and general market conditions," Kuznik adds. "We view this disposition as positive for future earnings."