Troubled Telit flogs automotive unit for $105m to pay off debts

 
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The company specialises in connected devices in vehicles (Source: Getty)

Troubled technology company Telit Communications has flogged its automotive business for $105m (£80m).

The sale to TUS, a Chinese provider of driver assistance solutions, will allow Telit to pay down its $25m debts and pump more money into the rest of the business.

Lorne Daniel, an analyst at Finncap, said the deal would "provide great security as well as working capital for future growth".

"It represents very good value for one of Telit’s fastest-growing but least profitable operations, and will recapitalise as well as lift margins in the remaining business."

The company said the sale would allow it to focus on industrial Internet of Things (IoT) innovation.

Its automotive unit links up vehicles with internet-enabled devices so that customers can track their fleets, keep an eye on assets and improve the overall driving experience.

Read more: Telit Communications earnings drop after "very challenging year"

Boss Yosi Fait said: "This transaction will significantly reduce our debt and provide us with the financial flexibility to focus our resources and accelerate the integration of our hardware and IoT services product lines in order to strengthen our leading position in the end-to-end IoT solutions space."

Shares in Telit were up three per cent in afternoon trading.

The group has been inundated with problems ever since it emerged that its former chief executive Oozi Cats was in fact convicted fraudster Uzi Katz.

Shares in the company took a battering last year when Cats's true identity emerged, just a couple of days after the stock had plummeted 40 per cent on the back of a trading update.

Then in March of this year it confirmed that the City watchdog is investigating the timing of its financial statements.

Earlier this month it also confirmed that the administrators of Italian company Bartolini After Market Electronic Services (BAMES) have brought a civil claim against the company. It intends to fight the claim.

Read more: Telit Communications confirms it is being investigated by City watchdog

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