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Ciber To Sell German, Danish Businesses for $8.8M As The Company Struggles To Repay Wells Fargo

Michael Novinson

Ciber has agreed to sell its German and Danish businesses to German IT company Allgeier, advancing Ciber's efforts to repay Wells Fargo $39.7 million for an outstanding loan.

The Greenwood Village, Colo.-based company, No. 43 on the CRN Solution Provider 500, said it plans to use up to half of the sale proceeds to reimburse Wells Fargo, with the remaining money needed to fund existing working capital needs.

Ciber will receive proceeds from the deal in three separate installments: at closing, in March 2018, and in March 2019. Part of the purchase price is contingent on the Ciber business unit hitting operation performance targets in 2017 and 2018.

[RELATED: Ciber Gets Default Waived by Wells Fargo, Will Take Action Yielding $25M In Proceeds By End Of Year]

"The sales of Ciber Germany and Ciber Denmark is consistent with our announced strategy to divest non-core assets," Michael Boustridge, Ciber's president and CEO, said in a statement. Ciber did not immediately respond to requests for additional comment.

Under Ciber's previous agreement with Wells Fargo, the company had until Jan. 31 to close a transaction yielding proceeds of at least $25 million. But on Wednesday morning, Ciber filed a notice with the U.S. Securities and Exchange Commission (SEC) laying out alternate ways for the company to fulfill its obligation to Wells Fargo.

As part of the new agreement, Ciber must do the following: deliver two letters of intent to Wells Fargo by Feb. 11 with other parties interested in transactions with net proceeds sufficient to repay the company's outstanding balance (Ciber has done this); have Wells Fargo be satisfied that the parties remain in good faith negotiations; and close the deals and permanently repay Wells Fargo the $39.7 million by Feb. 28.

Ciber said it expects to close the sale of its German and Danish businesses this month following the receipt of regulatory approvals. Ciber's German business accounts for nearly half of the company's international revenue and has suffered from high levels of attrition, Boustridge said in November, forcing the company to hire subcontractors to fulfill its contractual duties in the country.

Wells Fargo's line of credit was supposed to mature May 7, but the bank accelerated the maturation date to the end of this month as part of Wednesday's renegotiated deal. The renegotiated agreement also limits Ciber's ability to borrow money for items not listed in the company's cash forecast provided weekly to Wells Fargo.

Ciber shares fell $0.13 (-31%) to $0.29 since the renegotiated agreement with Wells Fargo was announced, but have rebounded $0.03 (10.3%) to $0.32 in after-hours trading on Friday once the asset sale to Allgeier was revealed. The New York Stock Exchange (NYSE) told Ciber in November that it is at risk of being delisted due to its average closing price being below $1 per share for 30 days in a row.

Allgeier plans to combine the acquired Ciber entities with its own existing SAP business under the umbrella of Allgeier Enterprise Services AG. The company said it could further expand Ciber's business thanks to relationships with enterprise domestic and international companies, as well as upper mid-market firms in Germany, France and Denmark.

"These acquisitions reflects our strong commitment to the future of SAP and the value for our customers by bringing Enterprise IT Services and new SAP technologies together," Hubert Rohrer, a member of Allgeier's executive board, said in a statement. "Our interests are completely aligned with Ciber."

Ciber was required by Wells Fargo to bring a strategic advisor to help the company refinance, merge or sell assets, and announced in November that global investment bank Houlihan Lokey had been retained for that purpose. The company's board also established an M&A committee to ensure that it's competitive in all markets, Boustridge disclosed in November.

Ciber's international revenue plummeted in the company's most recent quarter to $46.7 million, down 44 percent from $82.8 million the year prior. The company began unloading European business units in the summer, selling its 400-employee Dutch business and 130-employee Norway business to ManpowerGroup in June and August for $25 million and $7 million, respectively.

The company also sold its Swedish business in September to Bouvet Stockholm of Oslo, Norway. However, the company's agreement to sell its $10 million Australian business to local management fell through in August.

Ciber's divestitures began just a month after the company announced that Mark Floyd would become its chairman, replacing company founder and former Chairman Bobby Stevenson. Floyd was one of three new independent directors added to Ciber's board in 2015 as part of an agreement between the company and activist investor Lone Star Value.

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