UTStarcom agrees to let go of handset unit

UTStarcom has reached an agreement to sell its personal communications Division to a newly formed entity controlled by AIG Vantage Capital, a part of AIG Investments.

The expected proceeds of approximately € 152 million (US$240 million) will be based primarily on the net working capital levels, subject to certain adjustments.

In addition to the cash consideration, UTStarcom could also receive up to €31.5 million (US$50 million) based on a three-year earn out provision.

The transaction has been unanimously approved by UTStarcom's board of directors and is subject to customary closing conditions including debt financing.

Completion of the transaction is not subject to UTStarcom shareholder approval and the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act has expired.

Subsequent to the transaction, the privately held company will be called Personal Communications Devices, LLC and will be led by the current management team who will be part-owners of the company with AIG Vantage Capital and other investors.

Merrill Lynch & Co. acted as financial advisor to UTStarcom.