The board of directors at General Cable Corp. (NYSE: BGC), which makes wire and cable products, including fiber-optic cable, announced last week that they have launched a review of strategic alternatives, including the potential sale of the company. J.P. Morgan Securities LLC, as financial advisor, and Sullivan & Cromwell LLP, as legal advisor, will assist in the process.
"After careful consideration, our Board has determined to undertake a review of strategic alternatives with the goal of maximizing shareholder value," confirmed John E. Welsh, III, non-executive chairman of the board. "While the management team has made excellent progress in the execution of our strategic roadmap to transform the company into a more focused, efficient, and innovative organization, we expect the industry to consolidate over time and believe the review at this time is in the best interests of shareholders."
The company announced restructuring plans in July 2014 with an eye toward reducing costs by, among other means, closing underperforming assets and consolidating facilities (see "General Cable announces restructuring, hedges on full-year outlook" on Lightwave sister site Cabling Installation & Maintenance). The plan was expected to create $10 million of savings that year, with ongoing annual savings of $75 million beginning in 2016. In addition, approximately 1,000 employees (about 7% of the company's workforce) were expected to lose their jobs.
"I am proud of the efforts of our people to transform our business over the last two years, including rationalizing the asset base and refocusing on core businesses, streamlining our supply chain, and accelerating profitable growth in key segments," said Michael T. McDonnell, General Cable's president and CEO. "While we are benefiting from these significant operational and financial performance improvements, current dynamics in our industry are masking those accomplishments, and we expect that trend to continue through the second half of 2017 and into 2018. As the board conducts its review, we remain committed to executing our plan, to competing and to continuing to deliver innovative wire and cable solutions that exceed customer expectations."
The company warned that the strategic review might not result in a transaction. It also declined to estimate how long the review would last.
General Cable plans to report results of its second quarter 2017, which ended June 30, 2017, on August 2, 2017. As part of the strategic review disclosure, General Cable revealed preliminary results for the quarter, which included revenues of approximately $923 million for North America, Europe, and Latin America. Company management said it expects to report reported operating loss and adjusted operating income of approximately ($23) million and $32 million, respectively. The expected reported operating loss primarily derives from a one-time non-cash charge of approximately $36 million arising from the sale of the company's investment in Algeria, according to the announcement.
The company's offers fiber-optic cable products for service provider terrestrial and submarine network applications as well as for enterprise networks (see, for example, "General Cable touts long-haul submarine fiber contract" and "General Cable debuts halogen-free fiber distribution cables").
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