(December 28, 2010 – GLOBE NEWSWIRE) — Arkados (OTCBB:AKDS), powerline communication technology company, entered into a definitive asset purchase agreement to sell its semiconductor business to STMicroelectronics, Inc. STMicroelectronics will pay Arkados $11 million under the agreement, out of which it has already made an initial payment of $7 million in exchange for a license from Arkados.
A portion of this payment was applied by Arkados to settle approximately $12 million of $20 million of outstanding secured debt. The parties expect to complete this transaction in the first quarter of 2011.
This critical initial step is part of a major balance sheet restructuring plan that will consist of elimination of nearly its entire $30 million of debt — approximately $20 million of secured debt through a cash settlement and elimination of the nearly $10 million of unsecured debt primarily through the conversion into equity of Arkados.
Upon the completion of the transaction Arkados will focus on development, manufacturing, and sales of consumer electronics and Smart Grid products based on powerline communication semiconductors. Arkados will also continue to provide consulting and development services to existing customers and users of powerline communication semiconductors.
Arkados’ president and CEO Oleg Logvinov and SVP of engineering Michael Macaluso are transitioned to STMicroelectronics as part of this agreement. Arkados is further reducing its future costs as a result of semiconductor-related employees having resigned from Arkados and transitioned to ST. Grant Ogata, currently the EVP of Arkados, will serve as acting CEO of Arkados. Ogata, a 30 year veteran of the consumer electronic industry was formerly VP of global sourcing and product development of RadioShack Corporation.
Ogata commented, "We believe this transaction represents an important new chapter for Arkados, allowing the company to move forward without the previous debt burden, and leverage technology and patents developed by Arkados’ team over the past ten years. The growth of the market for products that provide multi-room distribution of multi-media content continues to accelerate. We expect Smart Grid markets to grow rapidly, and we will be able to design and sell unique, reliable products to serve these exciting markets. "
Arkados delivers a universal platform that enables networking of home entertainment and computer devices using standard electricity lines. The company’s system-on-chip solutions are designed to drive a wide variety of powerline-enabled consumer electronics and home computing products, such as stereos, radios, speakers, MP3 players, computers, televisions, gaming consoles, security cameras and cable and DSL modems. More information can be found at http://www.arkados.com