Aetrium Exploring “Strategic Alternatives” After Dismal Q4

CEO Joseph C. Levesque told Twin Cities Business that “we have to be vague” but acknowledged that a sale of one or both of the company’s product groups is possible, and a private takeover or merger is not out of the realm of possibility.

North St. Paul-based Aetrium, Inc., which earlier this month settled a dispute with dissident investors wanting to overthrow the company’s board, said late Wednesday that it’s exploring “strategic alternatives”—a decision that was announced in conjunction with dismal fourth-quarter financial results.

“We have to be vague at this point in time,” Aetrium CEO Joseph C. Levesque told Twin Cities Business on Thursday when asked what those alternatives might be. But he acknowledged that a sale of one or both of its product groups is possible, and a private takeover or merger is not out of the realm of possibility.

Levesque said the company will likely hire an “outside party or parties” to help it explore its options and confirmed that a timeline for that process hasn’t been established.

“I think we want to make a good decision for the shareholder, and that will be the guide,” he added.

Investors appear to be pleased with the company’s decision to explore a possible sale: Shares of its stock were trading up 6.71 percent at $0.74 early afternoon on Thursday.

Aetrium makes equipment used by the semiconductor industry—and it claims that demand for its products is driven largely by end-user demand for electronics, which has waned in recent years.

Revenue for the fourth quarter totaled $1.5 million, down 34.9 percent from the same period of 2011. Meanwhile, the company reported a net loss totaling $865,000, or $0.08 per share; that compares to a net loss of $602,000, or $0.06 per share, in the fourth quarter of the previous year.

Levesque pointed out that the fourth-quarter results signify an improvement from the third quarter, when the company reported a net loss of $4.1 million on revenue totaling $796,000.

“We sold reliability test systems to two new customers in the quarter, including a high-capacity system sold to a government-sponsored location in India involved in the aerospace field,” he said in a statement. “This is our first sale to a customer in India and this will be a high-profile installation.”

For the full year, Aetrium reported $6.2 million in revenue, down 30.7 percent from 2011, and a net loss of $6.1 million, or $0.57 per share; that compares to a net loss of $4.7 million, or $0.44 per share, in 2011. Levesque said Thursday that demand in the semiconductor industry is expected to remain weak for the first half of 2013 but pick up in the second half of the year.

At its high point in 1998, the company generated more than $67 million in annual revenues and employed more than 445 people (150 in St. Paul). Today, it employs about 50 and ranks 97th among Minnesota’s 100 largest public companies based on revenue.

Aetrium made headlines last fall and earlier this year because of a heated dispute with an activist shareholder group that was trying to take control of its board. The group, formed in August, called itself “Concerned Aetrium Shareholders” (CAS), and its members collectively owned 17 percent of Aetrium’s shares. CAS had claimed that it was necessary to replace Aetrium’s leadership because the existing board had been unable to halt a drop in the company’s stock price, poor financial performance, and excessive compensation, among other accusations. It even sued Aetrium in late November after the two sides couldn’t agree on the results of a vote that took place at a special shareholder meeting on November 26.

But earlier this month, the company and CAS settled their dispute and reached an agreement under which five members of the investor group immediately joined the board of Aetrium. In conjunction with the agreement, the company’s six-member board increased in size to 11 members—but only temporarily.

The board will consist of five members following Aetrium’s annual shareholder meeting scheduled for May 15. Before that meeting, directors from both parties will see if they can agree on a common direction for Aetrium and a slate of five directors to be presented for a shareholder vote. If not, the company and the investor group will be able to nominate competing five-member slates.

Levesque said Thursday that the newly created board recently had its first meeting, adding that it “went well” and the decision to explore strategic alternatives was unanimous.

“The board members have put our differences behind us,” he said. “We finally agreed that we’ve got to stop fighting and get on with life.”

Levesque also said “it is still our intent to have an uncontested slate” at the May shareholder meeting “if that’s at all possible,” and he thinks there’s a “good chance” that will happen.

Aetrium, founded in 1983, is one of Minnesota’s smaller public companies.