GP Strategies Announces Divestiture of IC Axon, Improved Liquidity and Increased Focus on Core Competencies

Rhea-AI Summary

On October 7, 2020, GP Strategies Corporation (NYSE: GPX) announced the successful divestiture of its IC Axon business to CM Canada Acquisitions for approximately $28 million. The deal includes an adjustment based on the business's working capital at closing and potential additional payments of up to $2 million based on revenue performance. The IC Axon unit reported trailing twelve-month revenue of $12.5 million as of June 30, 2020. The divestiture is part of GP Strategies' strategy to improve liquidity, with total asset sales in the last year amounting to $53 million.

Positive

• Divestiture of IC Axon improves liquidity with approximately $28 million in cash.
• Additional up to $2 million may be earned based on revenue performance.
• Total asset sales in the past year reached $53 million.
• Focus on core competencies is expected to drive long-term growth.

Negative

• None.

COLUMBIA, Md., Oct. 7, 2020 /PRNewswire/ -- Global workforce transformation solutions provider GP Strategies Corporation (NYSE: GPX) today reported the completion of its divestiture of its IC Axon business division to CM Canada Acquisitions, Inc., a wholly-owned subsidiary of ClinicalMind, LLC,  a leading healthcare communications company. ClinicalMind paid GP Strategies approximately $28 million in cash for the business, subject to an adjustment based on the final determination of the business's working capital as of closing, of which $1.5 million was placed into escrow for 12 months. Up to an additional $2 million of consideration may be paid to GP Strategies if IC Axon achieves certain revenue objectives for calendar year 2020. The acquired IC Axon business has trailing twelve-month revenue of approximately $12.5 million as of June 30, 2020.

"Our sales of assets in the last year have improved our liquidity and focused our efforts toward our largest industry verticals," stated Mike Dugan, Chief Financial Officer. Gross proceeds from the sales in the past 12 months represented approximately $53 million. The total trailing twelve-month revenue stream for the businesses sold, as of the date of closing of each acquisition, was approximately $30 million. The company generated approximately $234 million in revenue from the first six months of 2020, which included approximately $5.7M of revenue from the businesses sold. 

"We believe that our proactive approach during the pandemic has positioned the company for long-term success and provided us with more bandwidth to focus on our core strategy and growth in a more concise platform," said Adam Stedham, Chief Executive Officer.

About GP Strategies
GP Strategies Corporation (NYSE: GPX) is a global workforce transformation solutions provider of training, digital learning strategies and solutions, management consulting, and engineering services. GP Strategies' solutions improve the effectiveness of organizations by delivering innovative and superior training, consulting, and business improvement services, customized to meet the specific needs of its clients. Clients include Fortune 500 companies, automotive, financial services, technology, and other commercial and government customers.

Forward Looking Statement
We make statements in this press release that are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. These statements reflect our current expectations concerning future events and results. We use words such as "expect," "intend," "believe," "may," "should," "could," "anticipates," and similar expressions to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. For a full discussion of these risks, uncertainties, and factors, we encourage you to read our documents on file with the Securities and Exchange Commission, including those set forth in our periodic reports under the forward-looking statements and risk factors sections. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
© 2020 GP Strategies Corporation. All rights reserved. GP Strategies and the GP Strategies logo design are trademarks of GP Strategies Corporation.

 

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SOURCE GP Strategies Corporation

FAQ

What was the amount received by GPX from the IC Axon divestiture?

GP Strategies received approximately $28 million in cash from the IC Axon divestiture.

What is the potential additional payment from the IC Axon sale?

GP Strategies may receive up to an additional $2 million based on IC Axon's revenue performance for 2020.

What was the trailing twelve-month revenue of IC Axon as of June 30, 2020?

The trailing twelve-month revenue of IC Axon was approximately $12.5 million as of June 30, 2020.

How much did GP Strategies generate in revenue in the first half of 2020?

GP Strategies generated approximately $234 million in revenue in the first six months of 2020.

What was the gross proceeds from asset sales reported by GPX in the last year?

The gross proceeds from asset sales in the last year amounted to approximately $53 million.