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Black Box CEO On Sale: ‘We Could Not Support The Debt’

‘I am proud of the work all of you have done to hold the business together these last several months under difficult circumstances,’ CEO Joel Trammell tells employees.

In his first public comments since announcing the sale of Black Box, CEO Joel Trammell told the company’s 3,000 employees on Tuesday that they and the executive team will still have jobs, as the company moves forward with its plan to sell to a Singapore subsidiary of AGC Networks.

“Do you still have a job? YES, if you had a job yesterday you have a job today,” he told employees according to a transcript of the call that was filed with the SEC. “It is important to understand why AGC is making this acquisition. This is not a case of two companies with significant overlap that can increase their profits by eliminating duplicate expenses. The reason AGC was excited about Black Box was that it gave them capabilities where they were weak (primarily the US and Europe) and would allow them to expand their business to be a true global provider.”

Lawrence, Pa.-based Black Box announced Sunday that its board of directors had agreed to sell the company to AGC for $16.4 million, or about $1.08 per share. While Trammell told CRN this past summer that the company would see significant growth in the next two years, he acknowledged that the legacy of debt he inherited when he took the reins of the company has been burdensome.

“I believed there was significant value in our businesses, but it was clear we could not support the debt load that had been placed upon the company,” Trammell said. “I am proud of the work all of you have done to hold the business together these last several months under difficult circumstances. I believe this acquisition is the best outcome for all our major stakeholders: employees, customers and stockholders.”

He told employees that AGC does not have a significant presence in the United States and will need to rely on the team at Black Box to help them, as they expand their business here.

“AGC has agreed to make an offer to purchase Black Box, in large part, because of the strength and scale of our team,” he said. “They only have a limited presence in North America and will depend upon our team members to deliver results. We have discussed no plans with AGC for any leadership changes. All current systems and business processes will remain in place and the current management teams will be operating the Commercial Services and TPS businesses for the foreseeable future.”

As to why AGC is purchasing Black Box, Trammell said it brings together “two global IT solution providers that share a ‘client focus.’ “ He added that the merger of the two companies will create a “unique organization” that has the scale to deliver “world-wide technical solutions” to the largest organizations. He said there are no plans to change the Black Box name.

“Black Box will continue normal operations for the foreseeable future,” he said. “The company will continue to execute its business plan and strategies for growth and profitability. The Black Box products business will continue to offer its full portfolio of products through our network of partners worldwide.”

Trammell said the deal is contingent on a shareholder vote in which stock owners must consent to selling a majority of the company’s shares to AGC for $1.08. That is 21 cents higher than the shares traded at the Friday before the sale was announced.

Trammell also said the deal is still contingent on a shareholder vote and will not close until “late December at the earliest.”

“Prior to closing, all decisions will continue to be made by the executive team without direction from AGC,” he added. “It is critical that we continue to build a profitable and growing business. In the end that is what insures the continued success of Black Box and our team members.”

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