CLEARWATER, FL—Nicholas Financial Inc. has finalized the acquisition of a majority stake in Amplex Electric Inc., an Ohio-based provider of rural broadband services. The deal, which was completed on Monday, strengthens Nicholas Financial's position in the broadband sector.
Under the terms of the Share Purchase Agreement dated May 1, 2024, Nicholas Financial acquired approximately 56.5% of Amplex, with the remaining 43.5% held by Mark R. Radabaugh, who will continue as CEO of Amplex. The cash transaction was valued at a base purchase price of $37.5 million, with adjustments as stipulated in the agreement. The acquisition was funded entirely through Nicholas Financial's available cash reserves.
Concurrent with the acquisition, Nicholas Financial entered into several agreements with Radabaugh on June 15, 2024, including an Employment Agreement, Put-Call Option Agreement, Stockholders Agreement, and Non-Competition Agreement. The Employment Agreement sets Radabaugh's base salary at $170,032 for an initial two-year term, with eligibility for cash bonuses and participation in the company's bonus program.
The Put-Call Option Agreement grants Nicholas Financial the right to purchase additional equity from Radabaugh in the future, based on a formula price. The call option is exercisable starting on the second anniversary of the closing, expiring on the fifth anniversary, while the put option becomes exercisable on the fifth anniversary and expires on the fifteenth.
The Stockholders Agreement outlines rights and obligations, including first refusal, co-sale, drag-along, and preemptive rights. It also specifies that Amplex's Board will include three directors, two appointed by Nicholas Financial and one by Radabaugh.
The Non-Competition Agreement restricts Radabaugh from engaging in competing broadband services outside of Amplex and includes non-disclosure and non-disparagement covenants.
Amplex, with over 9,100 fixed wireless broadband customers, 9,000 fiber passings, and 3,500 fiber customers, plans to use additional capital from Nicholas Financial to expand its fiber network in Ohio.
The financial statements and pro forma financial information related to the acquisition will be filed within 71 calendar days from the report's filing date.
In other recent news, Nicholas Financial Inc. has announced a significant change in its executive team. The company has reported that Irina Nashtatik has resigned as Chief Financial Officer for personal reasons, effective June 6, 2024. She will be succeeded by Charles Krebs, starting June 19, 2024.
Nashtatik will continue with Nicholas Financial until July 12 to ensure a smooth transition and will then serve as a consultant until the end of the year. The company clarified that her resignation was not due to any disputes or issues related to company operations or accounting practices.
Charles Krebs, the incoming CFO, brings a wealth of experience from his prior roles in treasury and finance at Peter Kiewit Sons Inc. His compensation package includes an initial annual base salary of $190,000, set to increase to $200,000 in the second year, and an annual bonus with at least 20% of his base salary, half of which will be awarded in company shares.
InvestingPro Insights
As Nicholas Financial Inc. ventures further into the broadband sector with its recent acquisition of Amplex Electric Inc., a glance at the company's financial health through InvestingPro data reveals a mixed picture. With a market cap of $47.39 million, Nicholas Financial is navigating the market with a significant amount of liquid assets, as they exceed short-term obligations. However, the company has not been profitable over the last twelve months and does not pay a dividend, which may be a consideration for income-focused investors.
The company's aggressive revenue growth in the last quarter, at a staggering 2292.3%, indicates a potential turnaround or a significant expansion, likely tied to recent strategic moves such as the Amplex acquisition. Despite this, the overall revenue decline over the last twelve months sits at -73.03%, signaling challenges that the company has faced or strategic shifts that may have affected revenue streams.
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