Benzinga | Aug 10, 2021 08:32AM EDT

Yunhong CTI Reports Deal To Sell Its Flexo Universal Unit For $500K

Yunhong CTI Ltd. (NASDAQ:CTIB) ("Yunhong CTI" or the "Company"), a leading manufacturer of custom film products, foil and latex novelty balloons, and flexible packaging products, announced that it has entered into an agreement (the "Agreement") for the redemption of all of its equity interests in Flexo Universal S DE RL DE CV, a Mexican corporation ("Flexo"), in a transaction with Kingman Distributions, S.A. DE C.V, a Mexican corporation (the "Buyer"), that will become the majority owner of Flexo (the "Transaction"). Flexo Universal is currently a subsidiary of the Company and manufactures latex balloons in Guadalajara, Mexico.

"We've significantly evolved our business over the past year and today's announcement reaffirms the positive progress we have achieved in realigning our operations to position the Company for improved performance and growth," said Jana Schwan, Chief Operating Officer of Yunhong CTI. "We believe the company is now at an important inflection point. With this transaction, the reduction in our revolving credit facility, and improving business fundamentals, we head into 2022 on a sounder financial foundation to support our growth objectives."

In connection with the Transaction, the Buyer agreed to pay the Company $500,000, of which $100,000 will be paid at closing and the remainder will be paid in installments over twelve months following closing (the "Installment Obligations"). The Installment Obligations are to be secured by a pledge of the assets of Flexo, as well as by guaranties provided by the Buyer and Pablo Gortazar, an individual with an ownership interest in Flexo, pursuant to a Guaranty and Security Agreement to be entered into among the Company, the Buyer, Flexo and Mr. Gortazar at the closing.

The closing of the Transaction is expected to occur on October 10, 2021. The closing is conditioned on, among other things, (i) the Company being released from all obligations in connection with its guaranty of the real property lease for Flexo's facility, and (ii) the Company repaying its obligations in full to PNC Bank, National Association.