XML 26 R14.htm IDEA: XBRL DOCUMENT v3.22.0.1
Business Divestiture
 12 Months Ended
Dec. 31, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Business Divestiture Business Divestiture
Sale of Ctrack South Africa Operations
On February 24, 2021, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Convergence to sell its Ctrack South Africa business operations in an all-cash transaction for 528.9 million South African Rand (“ZAR”) (approximately $36.6 million United States Dollars). The Purchase Agreement provides for an adjustment to the purchase price based on a normalized level of net working capital.
On July 30, 2021, the Company completed the sale of Ctrack South Africa. Initial cash proceeds of $36.6 million were received. Net cash proceeds received were $31.5 million, net of cash divested of $5.0 million. Final cash proceeds were subject to certain post-closing working capital adjustments which totaled $2.6 million, out of which $2.2 million was received on October 29, 2021, and the remaining $0.4 million was offset with the Company’s existing accounts payable balance to Convergence.
The Purchase Agreement required the Company to place in escrow 52.9 million ZAR, (approximately $3.3 million United States Dollars), which will be released on July 30, 2022. The funds in escrow will allow for Convergence to submit claims that are deemed to be uninsured warranties as defined in the Purchase Agreement. Such funds in escrow is recorded as restricted cash on the consolidated balance sheet.
In evaluating the accounting treatment for this sale, the transaction was considered to be the deconsolidation of a subsidiary, as defined in ASC 810 Consolidation. The gain upon sale is $5.3 million. Such gain has been recognized as gain on sale of Ctrack South Africa in the consolidated results of operations during the year ended December 31, 2021. The Company also recorded $2.2 million of transaction expenses, which were expensed as incurred and included within other income (expense), net, in the consolidated results of operations for the year ended December 31, 2021.
The assets and liabilities of Ctrack South Africa that were sold in the transaction as of July 30, 2021, are summarized below:
(in thousands)
Assets:
Cash and cash equivalents$5,040 
Accounts receivable, net3,505 
Inventory 3,821 
Prepaid expenses and other 370 
Property, plant and equipment, net4,545 
Rental assets, net2,448 
Intangible assets, net11,278 
Goodwill 10,734 
Total assets$41,741 
Accounts payable$3,961 
Accrued expenses and other liabilities1,107 
Deferred tax liabilities, net3,647 
Other long-term liabilities 746 
Total liabilities9,461 
Net assets $32,280 
Net proceeds recognized are comprised of the following:
(in thousands)
Initial purchase consideration received, upon close$36,566 
Working capital adjustments2,584 
Net proceeds recognized $39,150 
Net gain on sale is comprised of the following:
(in thousands)
Gross proceeds recognized$39,150 
Less: Book value of net assets sold 32,280 
Less: Release of cumulative foreign currency translation adjustments related to Ctrack South Africa1,608 
Net gain on sale $5,262