Viratel Sells Stock to Meet Capital Needs : 60% Stake Acquired by Microsemi of Santa Ana
Vitarel Microelectronics Inc., a fast-growing manufacturer of high-reliability semiconductors and integrated circuits, has sold 60% of its stock to Microsemi Corp. of Santa Ana. for “close to $3 million” in debt and equity financing. Microsemi also acquired an option to buy all the remaining shares of closely held Vitarel.
Vitarel sales should reach $10 million for the fiscal year ending June 30, up from $2.8 million the previous year, said President G. Robert Tatum. Since February, Vitarel’s employee total has grown from 65 to 215, all of whom are based in San Diego.
Shipments of Vitarel’s circuits and microelectronic components have grown from a rate of $50,000 per month 18 months ago to $850,000 per month, Microsemi chief financial officer David Sonksen said.
But the company has lacked sufficient working capital to pay for its explosive growth and has been unable to fill recent product orders, Sonksen said.
The company also lost a “significant” sum of money last year despite the revenue growth, and hence was forced to seek outside capital, he said.
Leveraged Buyout
In August, 1986, Tatum engineered a leveraged buyout of Vitarel from parent company Medtronic Inc. of Minneapolis, one of the world’s largest pacemaker manufacturers. Tatum then announced plans to redirect Vitarel’s market strategy away from its reliance on supplying circuits to pacemaker manufacturers, including Medtronic, to supplying defense electronics companies.
Tatum will remain Vitarel’s chief executive, Sonksen said.
Vitarel was introduced to Microsemi officials by AVX, a Great Neck, N.Y., manufacturer of ceramic capacitors that sold its Costa Mesa-based Integrated Networks Inc. division to Vitarel in February. AVX is also a Vitarel shareholder and will invest an additional $1 million in the recapitalization announced Thursday, giving it a less than 20% interest in the company.
Microsemi, a publicly owned manufacturer of power-related and semiconductor products, posted net income of $5.5 million on revenues of $38.7 million for the year ended last Sept. 30. For the first nine months of this fiscal year, the company reported net income of $3.9 million on sales of $32.2 million.
