SMTC Corporation (NasdaqGM:SMTX) entered into a stock purchase agreement to acquire MC Test Service, Inc. from a group of shareholders for $70 million on November 8, 2018. The acquisition includes an initial purchase price of approximately $65 million plus an earnout up to an additional $5 million of consideration, contingent upon the performance of MC Test Service for the twelve calendar months ending March 31, 2019. Prior to the Closing, each qualifying option holder has delivered to SMTC an agreement evidencing and acknowledging the cancellation and forfeiture of all MC Test options and shall be entitled to receive a 10% portion of the earnout payment. As part of transaction, SMTC will holdback $0.65 million and expense reserve of $1 million. The purchase price will be subject to adjustments. The transaction is funded from proceeds of a new debt financing package, in combination with cash from SMTC's balance sheet, funded the transaction and related fees and expenses. B. Riley FBR, Inc. assisted SMTC in securing a new $45 million asset based revolving line facility from PNC Bank, of which $22 million was drawn at closing. Additionally, TCW Direct Lending LLC provided SMTC with a senior secured loan facility in the amount of $67 million, of which $62 million was drawn at closing, with $5 million available on a delayed draw basis. The combined company will operate under the name SMTC Corporation and currently plans to continue to operate and maintain the existing facilities operated by each company. For the twelve months ended September 30, 2018, MC Test reported $149.2 million of revenue, net loss of $4.1 million and EBITDA of $10.5 million. The purchase agreement was unanimously approved by the Board of Directors of SMTC Corporation.

B. Riley FBR, Inc. acted as exclusive financial advisor and Perkins Coie LLP acted as legal counsel to SMTC. Baker & Hostetler LLP acted as legal counsel to MC Test Service and Cyprium Investment Partners. Charles Irvin and Jeff Stine of BDO acted as accountant to SMTC Corporation.

SMTC Corporation (NasdaqGM:SMTX) completed the acquisition of MC Test Service, Inc. from Cyprium Investment Partners, LLC and others on November 8, 2018.