Credit Key to View Tech Buyout of Telecom Firm
Officials of View Tech Inc., a Camarillo manufacturer of voice, data and video communications products, agreed last month to purchase Vermont Telecommunications Network Services.
Now, thanks largely to its alliances with Imperial Bank of Los Angeles and BankBoston N.A. of Boston, the company has closed the deal.
The two financial institutions provided View Tech with a combined $15-million credit agreement that enabled View Tech to complete the purchase of the Burlington-based firm, a sales agent for Bell Atlantic with 1996 revenues of $2.4 million.
Robert Hatfield, chief executive of View Tech, said the financing also will allow the company to grow further, particularly through additional acquisitions.
“A credit facility is necessary when a company is growing like we are annually,” Hatfield said.
“The company went public 30 months ago at $7 million in sales and we’re now running at a clip that will put us at $48 million in sales,” he said. “As a company grows at that rapid rate, you are constantly taking a look at whether your credit structure is consistent with the size of the company, both internally and through acquisition.”
Credit lines such as the one provided to View Tech are common in the business community.
“This is a regular part of business--companies need capital and can get capital in different forms,” said Jim Higgins, vice president of Imperial Bank, which underwrote $9 million. “Ultimately a company wants to reduce the cost of capital, and debt is one way of doing that. It’s a common occurrence for companies to get as much debt as they can because debt is the cheapest form of capital.”
But it takes a fair amount of confidence on the part of financial institutions to seal any credit transaction. Higgins said View Tech’s management, staff and financial structure inspired that confidence.
“We think View Tech has all the attributes to be successful in the future,” he said. “The telecommunications industry is very dynamic at this point in time, and there is great potential for smaller companies to make significant contributions and significant profits with the deregulation of the industry.”
