Financial Details for Harris Broadcast Sale Disclosed
We are learning more about the financial details of The Gores Group’s purchase of Harris Broadcast Communications from Harris Corp. earlier this month. The deal included a $160 million cash payment and several other provisions.
According to a report by market research firm Devoncroft, the deal includes a $15 million subordinated promissory note, which is payable 15 months after closing, accrues simple annual interest at 6% and is unsecured.
The closing is expected to take place early in calendar year 2013.
In addition, The Gores Group will pay an earnout of up to $50 million based on the future performance of Harris Broadcast.
The terms of the earnout states that in each of the four calendar years from 2013 through 2016, Harris Corp. will receive a contingent payment in cash of 20% of the revenue of Harris Broadcast Communications division that is in excess of a specified target revenue amount, according to the market research firm.
In its SEC filings, Harris Corp. did not specify the target revenue amount required to trigger the contingency payment to Harris Corp., according to Devoncroft, which adds, “Therefore, it is difficult to judge how likely it is that the payment will be triggered. The contingency payment amount is subject to an annual cap of $25 million in each calendar year through 2016.”