An external review of finances and an ongoing search for a new chairman form part of Telit Communications’ plan to tidy up its governance affairs following the resignation of its CEO in August.
Interim CEO Yosi Fait was appointed after the departure of Oozi Cats from the “Internet of Things” business. Cats quit after evidence was found alleging he is wanted in the US for wire fraud under the name Uzi Katz.
In a trading update, Telit said its new chief had commenced a review of its activities in a bid to deliver “significant rationalisation” of product lines and reduce its cost base, which it claimed has been in the mind of the board “for some time”.
It is continuing to search for three additional independent non-executive directors, one of whom will become chairman. “The search is progressing well and is ongoing,” Telit stated, though no timeframe was provided for appointments.
Earnings before interest, tax, depreciation and amortisation are expected to be between $44m (£33m) and $48m (£36m), compared with $54.4m (£40.5m) in 2016. This figure is before one-off restructuring costs, which are expected to be incurred following the review.
While confident of its financial strength, an unnamed accounting firm has been appointed to check certain elements of its financials, and this work is ongoing.
Telit expects to see normal cash generation in the second half of the financial year and to meet its financial covenants when tested to 30 September 2017. One financier has granted an advance waiver for any potential breach of free cash flow against debt service obligations.
“Despite a very difficult few months, we have retained our close customer relationships and our highly skilled employees and management team,” said Fait.
“We are focused on implementing a refreshed, more disciplined and prudent, as well as transparent, approach to corporate governance and the delivery of increased shareholder value.”