NEW YORK, Feb. 4 /PRNewswire-FirstCall/ -- Hudson Highland Group, Inc. today announced that it has completed the asset sale of its energy and engineering staffing businesses to System One Holdings LLC. The company received as consideration approximately $11.0 million in cash at closing, subject to post-closing adjustment; a five-year $5 million note; and a warrant exercisable for 10 percent of the equity of System One. Hudson Highland Group also has the right to receive an additional $600,000 in cash upon resolution of certain liabilities, and has retained $3.6 million of receivables of the business. System One is owned and operated by Troy Gregory, former chairman of Hudson Legal in North America.
"We believe this transaction sets up both businesses for greater success," said Jon Chait, Hudson Highland Group chairman and chief executive officer. "For Hudson, consistent with our long-term strategy, it allows us to focus all resources and investment on our high-growth, high-margin professional staffing and solutions businesses. Similarly, System One will have greater control of its own destiny and the ability to develop the infrastructure, tools, employment experience and brand that are best suited to the particular needs of its large-volume engineering resources market."
"The demand for energy today makes this industry one of excellent growth potential. I am looking forward to making System One a great success with its outstanding team of colleagues," said Gregory.
Hudson Highland Group will record a gain on the sale of approximately $4 million, after recording the note at a discounted value. The company will treat the business as a discontinued operation effective as of December 31, 2007.
For the year ended December 31, 2007, this business reported revenue of $146.2 million, gross margin of $18.7 million and operating income of $3.3 million. For the year ended December 31, 2006, this business reported revenue of $152.5 million, gross margin of $20.1 million and operating income of $5.8 million. For the year ended December 31, 2005, this business reported revenue of $155.1 million, gross margin of $22.3 million and operating income of $7.8 million.
The company expects to offset the impact of this transaction over the next six to nine months through a program to reduce the North American cost structure to match the current size of the business.
Hudson Highland Group
Hudson Highland Group, Inc. is a leading provider of permanent recruitment, contract professionals and talent management services worldwide. From single placements to total outsourced solutions, Hudson helps clients achieve greater organizational performance by assessing, recruiting, developing and engaging the best and brightest people for their businesses. The company employs more than 3,600 professionals serving clients and candidates in more than 20 countries. More information is available at http://www.hudson.com/.
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