CHS gains more cash after Vobis deal failure

Miami distributor CHS Electronics is undergoing financial restructuring to free up $800 million following the collapse of the Vobis deal.

The firm is renegotiating earn out agreements, which had to be paid in shares, the result being that CHS will be allowed to pay in cash or shares, at its discretion.

Claudio Osorio, chairman and chief executive of CHS, said: 'We expect to complete all such negotiations by the end of October and the most significant of them have already been completed.'

The move follows the crash in CHS' share price from its $30 high to $6 two weeks ago, believed to be a factor in the Vobis deal collapse. 'This step gives us the flexibility to avoid issuing shares at the current stock price,' Osorio added.

The financial restructuring is intended to free up $800 million, of which $400 million will be used to buy back senior notes and common shares, with the remainder to be used as working capital.

George O'Connor, analyst at Granville Research, commented: 'The change of financial model is something that is happening a lot in the US. CHS has isolated what type of business it wants for its next acquisition.

It now has a financial cushion, so the question is where the spotlight will fall next.'

The move is the latest in CHS' financial juggling to finance its continuing acquisition spree. In April, it completed a $200 million private debt offering and committed to a credit facility of $325 million from Barclays Bank and The Bank of Nova Scotia.