In an effort to alleviate a substantial cashflow problem which has resulted from softness in its end markets, SEMX Corp. said that it will sell its connector business to Litton Systems Inc.
SEMX, which provides specialty materials and services to the microlectronic and semiconductor industries, said it would sell the connector unit, called Rectonn Inc., for $23.9 million.
As part of the agreement, Litton Systems will also assume Rectonn's outstanding debt.
The proceeds from the sale will be used to pay down some of SEMX's existing bank debt, some of which has been extended or deferred in light of the company's recently disclosed liquidity problems.
When reporting its third-quarter earnings in November, SEMX said that the continuing delay in the industries it serves had put the company in a position where it could not make payments on some of its outstanding debt.
Last month, SEMX said it had reached an agreement with its lenders to extend until April the duration of about $22 million in short-term loans that had come due but that it could not repay. The company also said it is continuing to negotiate a longer-term restructuring of those loans.