Tech group Telit secures reprieve from banks

Telit, the internet of things business shaken this year when its former chief executive was linked to a US fraud indictment, has secured a waiver from its lenders to prevent it breaching covenants.

The company, which sells machine-to-machine technology and has been in early stage talks to sell its automotive division, said HSBC, its main lender, would waive the key financing tests that it would otherwise have failed on New Year's Eve. Londonlisted Telit has had a difficult few months after it severed ties with Oozi Cats, its former chief executive, following allegations of his links to a US fugitive by the name of Uzi Katz, who had been indicted for wire fraud in Boston in 1992.

Mr Cats resigned in August after Telit said: "The evidence shows that an indictment was issued against Oozi Cats in the US and that this fact was knowingly withheld from advisers."

The group issued a profit warning for 2017 in September and said it was reviewing its operations and finances. In October it emerged that Telit was in talks to sell its automotive division, which specialises in chips supporting internet of things networks and whose customers include Tesla. Such a deal would bring much needed cash to the business, which a source connected with the company said was one reason Telit's banks had been willing to waive covenants.

Private equity companies including Berkshire Partners, Vector Capital, Apax, Advent and Battery Ventures have showed interest in buying the automotive division.

"The board is pleased to report that the group's leading financing bank has granted an advance waiver for the potential breach of covenants as at 31 December 2017," Telit said on Thursday.