STM Wireless Posts 1st-Quarter Loss; Buyer Backs Out

Struggling STM Wireless Inc. posted a first-quarter loss of $8.5 million Monday and said its deal to be acquired by a San Diego communications firm has been called off.

The Irvine company’s $8.5-million loss, the equivalent of $1.20 a share, included $1.6 million from the devaluation of the Brazilian currency and $617,000 in one-time restructuring expenses. A year ago, the company lost $4.1 million, or 62 cents a share. Revenue fell 55% to $3.1 million from $6.9 million last year.

Last month, Remec Inc. said it would acquire STM, a provider of telecommunications to rural areas, in an all-stock deal then worth $32 million.

Company officials on Monday said there was no single item that broke the deal between Remec and STM. Since the merger plans were announced April 14, Remec stock fell from $17.38 a share to $13 at Monday’s close.

Instead of the merger, Remec has agreed to purchase $4.6 million worth of shares in STM’s Direc-To-Phone International subsidiary, which offers broad-band Internet and rural telephony services to developing countries. Remec will also purchase an additional $5 million worth in the next 180 days.

In addition, STM said Pequot Private Equity Fund LP bought an additional $2.5-million stake in the subsidiary and is investing $2.5 million more in the next round of financing. Pequot already owns more than 11% of STM’s outstanding shares and nearly 9% of Remec stock.

STM’s stock fell 11.5% Monday, or 38 cents a share, to $2.88.