Geometric completes acquisition of Modern's engineering services division

Our Corporate Bureau
02 November 2006

Mumbai: Product lifecycle management (PLM) and engineering services solutions provider Geometric Software Solutions has formally announced the closure of all transactions relating to the company's acquisition of Detroit-based Modern Engineering Inc.

Modern Engineering is a wholly owned subsidiary of virtual supply chain engineering, Inc, has been a leading provider of staffing, engineering and design services to the worldwide manufacturing industry since 1946.

Geometric Software Solutions Inc. (GSS Inc.), a wholly owned subsidiary, has bought 95 per cent shares of Modern Engineering Inc for $23.75 million. The remaining The MMG Group LLC, the management group of Modern, holds 5 per cent.

The acquisition of Modern by GSS Inc was financed through an equity investment of $14 million and a loan of $1.75 million, in addition to a term loan of $8 million from Citibank. The Indian parent financed its investment and loan to GSS Inc through an issue of equity shares on preferential basis to the Western India Executor and Trustee Co. Ltd, a fund managed by ICICI Venture Capital Fund Management Limited, for approx. $10 million, and internal accruals.

Modern has a working capital line of credit of approx. $7 million which is being refinanced by ICICI Bank UK Limited Geometric has taken a working capital loan
of $4.5 million.

With this, Geometric and its subsidiaries will have a term loan of approx. $8 million and working capital loans of approx. $11.5 million on its balance sheet.