Comverge Avoids Crisis at a Big Price
On Monday, Comverge said it would sell itself for $49 million -- or $1.75 a share in cash -- to the private equity firm H.I.G. Capital. That takeover price falls well below analyst estimates of the company's worth and its 1-year highs even after a 2012 stock rally.
"The transaction addresses the risks associated with the company's liquidity position, provides for our financial viability going forward and allows Comverge to continue to execute on its business plan with the financial backing of H.I.G. Capital," said Comverge Chairman Alec Dreyer.
Prior to Monday's private equity buyout, the company released an auditor opinion in a March 15 regulatory filing that showed its finances would break debt covenants, raising "substantial doubt about Comverge's ability to continue as a going concern." In addition, Comverge said it had received default notices from its lenders, precipitating the need for an immediate capital raise or sale."Absent the H.I.G. Capital transaction, Comverge believes it would be unable to raise the necessary capital to fund continuing operations, which would place existing stockholder investment in the Company at significant risk," said Comverge in a press release. Still, analysts gave the Norcross, Ga- based company a value far higher than the $1.75 takeout price, even after accounting for Comverge's liquidity strains. The takeover price falls well below the $2.35 share value for Comverge that analyst polled by Bloomberg give the company. Meanwhile, in early Monday trading, Comverge's shares were trading in line with offer price after a halt related to the deal news.
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