Converge Technology (TSX: CTS) is looking for methods by which it can unlock shareholder value. The firm late last night revealed that it has begun the process of a strategic review as a means of maximizing shareholder value.
Converge has formed a special committee to conduct the review process, consisting of three independent directors including Brian Philips, Darlene Kelly, and Ralph Garcea. The committee was reportedly formed in response to expressions of interest that have been received by the firm, with the trio to also examine alternatives that include a sale, merger, divestiture, recapitalization, or other strategic transaction.
The company currently bills itself as an IT and Cloud Solutions provider, while also providing related advisory services. In the three months ended September 30, the firm generated revenues of $603.2 million, with a gross profit of $139.7 million and an overall net income of $18.2 million.
Balance sheet issues do exist for the company however. The firm as of the end of Q3 had a cash position of $172. million and total current assets of $999.6 million, versus trade and other payables of $686.6 million and total current liabilities of $1,184.9 million, resulting in a current ratio of 0.84.
That ratio is expected to have further declined since the end of the quarter as well, following the purchase of Stone Technologies Group on November 4 for $64.1 million, of which $59.9 million was paid in cash, while the remainder came from working capital adjustments.
The last several weeks have also not been kind to the company in terms of valuation, with its share price declining from highs of beyond $12.00, to that of just $3.99 as of yesterday’s close as the tech sector continues to see investors make their exit.
“Our management team is fully aligned with the Board’s decision to explore strategic options to maximize shareholder value,” commented CEO Shaun Maine.
Converge Technology last traded at $3.99 on the TSX.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.