Monday, June 30, 2008

UTStarcom to Sell Personal Communications Division to AIG Vantage Capital

UTStarcom agreed to sell its Personal Communications Division ("PCD") to a newly formed entity controlled by AIG Vantage Capital, a part of AIG Investments. The expected proceeds of approximately US$240 million will be based primarily on the net working capital levels, subject to certain adjustments. In addition to the cash consideration, UTStarcom could also receive up to US$50 million based on a three-year earn out provision.

UTStarcom's PCD business primarily distributes handsets and related accessories in North America. Subsequent to the transaction, the privately held company will be called Personal Communications Devices, LLC and will be led by PCD's current management team who will be part-owners of the company with AIG Vantage Capital and other investors.

The Handset business unit of UTStarcom will continue to design and provide devices to be sold in the Americas through Personal Communications Devices, LLC as part of a supply agreement. UTStarcom will also sell devices directly to carriers in other areas of the world.

UTStarcom said the divestiture of PCD is consistent with its strategic refocusing announced in late 2007. The company also recently announced a divestiture of its Mobile Solutions Business Unit. UTStarcom to focus on its core IP-based product offerings in rapidly growing economies around the world.