Aetrium, Inc. (NASDAQ:ATRM) To Assume $1.4 Million Debt In Recent Acquisition

Posted on Apr 23 2014 - 1:30pm by Duncan Oleinic

Boston, MA 04/23/2014 (wallstreetpr) – Aetrium, Inc. (NASDAQ:ATRM), a $6 million company that provides technology for handling of integrated circuits, announced it will assume $1.4 million in debt following its deal to acquire home builder KBS Building Systems Inc.

The company announced earlier this month that it agreed to acquire the privately held KBS for about $10.5 million in a move that will diversify its operations. Under the acquisition agreement, the company will meet part of the acquisition cost in cash and the balance will be settled through promissory note by its subsidiary.

Aetrium, Inc. (NASDAQ:ATRM) expects to settle $5  million portion of the deal in cash and the remaining $5.5 million will be settled over a six-month period by promissory note issued by a subsidiary. However, in addition to the $10.5 million cost of the deal, the company will shoulder $1.4 million debt position in KBS.

Loan financing

Aetrium announced the cash payment in the acquisition will be supported by a loan from Lone Star Value Investors, an investment fund, run by the chairman of its board of directors Jeffery E. Eberwein. The loan arrangement allows the company to obtain $6.5 million from Lone Star Value Investment.

Aetrium announced that the loan repayment will involve the conversion of $0.5 million into its common stock.

Diversification

Aetrium, Inc. (NASDAQ:ATRM) seeks to diversify into businesses that can attract higher revenue and low operation costs. Such investments are aimed at improving the company’s profits while ensuring that the company keeps its balance sheet stable.

KBS already enjoys a positive reputation in the modular home business and Aetrium expects to ride on good reputation and extensive customer network to improve its profitability. No layoffs are expected at KBS, which has about 203 employees. However, Aetrium, Inc. (NASDAQ:ATRM) announced that KBS Building Systems Inc will assume a new name as KBS Builders once the deal is closed.

Real estate investment is becoming attractive as the market begins to attract investors as demand for housing soars. Students housing business is particularly attractive given the huge potential in the market. Therefore, the move by Aetrium to acquire KBS that already thrives in the industry comes as a timely investment decision.

While diversification should lead to improved performance at Aetrium, Inc. (NASDAQ:ATRM), analysts expect the company to continue taking more austerity measures to ensure that incremental revenue realized from diversified investments lead to a positive impact on the bottom line.

About the Author

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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