OAK BROOK, Ill., Sept. 4, 2012 /PRNewswire/ -- Federal Signal Corporation (NYSE: FSS) announced today that it has completed the sale of its Federal Signal Technologies Group ("FSTech") business to 3M Company (NYSE: MMM) for $110 million in cash, subject to working capital adjustments in favor of 3M of approximately $6 million. $22 million of the proceeds will be deposited into escrow to secure Federal Signal's indemnification obligations to 3M post-closing. The transaction will allow the Company to take advantage of certain provisions in its debt agreements which permit prepayment without penalty. The company will immediately repay $75 million of outstanding debt with proceeds from the transaction. (Logo: http://photos.prnewswire.com/prnh/20120420/CG91760LOGO) Dennis Martin, Federal Signal's president and chief executive officer stated, "I would like to thank all of the talented employees of FSTech for their innovative contributions and leadership in the intelligent transportation industry. I am confident that the partnership between FSTech and 3M will be a mutually rewarding one." As for the impact of the sale on Federal Signal, Mr. Martin stated, "The timing of the transaction provides us with a valuable opportunity to prepay debt at par, and to refinance the balance of remaining indebtedness in February of 2013. In addition to positively transforming our balance sheet, the sale will allow us to concentrate our focus on profitable growth in our core businesses of industrial and municipal equipment and safety and security solutions." Jefferies & Co., Inc. advised Federal Signal on the transaction, and Thompson Coburn LLP served as Federal Signal's legal counsel. About Federal Signal Federal Signal Corporation (NYSE: FSS) enhances the safety, security and well-being of communities and workplaces around the world. Founded in 1901, Federal Signal is a leading global designer and manufacturer of products and total solutions that serve municipal, governmental, industrial and institutional customers. Headquartered in Oak Brook, Ill., with manufacturing facilities worldwide, the company operates three groups: Safety and Security Systems, Environmental Solutions, and Fire Rescue. For more information on Federal Signal, visit: http://www.federalsignal.com.
Shareholders of Federal Signal Corp. looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the August covered call at the $17.50 strike and collect the premium based on the 55 cents bid, which annualizes to an additional 6.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.4% annualized rate in the scenario where the stock is not called away.