TEMPE, AZ -- Three-Five Systems has signed definitive agreement to sell the assets of its electronic manufacturing services subsidiary's operations in Redmond, WA.

Catalyst Manufacturing Services will purchase the subsidiary, TFS Electronic Manufacturing Services Inc., in a deal worth about $6.6 million. Catalyst will pay $3.6 million in cash and assume certain liabilities of TFS EMS.

As part of the deal, TFS EMS will file for Chapter 11 bankruptcy this week in Arizona and seek court approval of the sale. TFS will continue to fund the operations of TFSEMS through the closing date of the proposed sale through debtor in possession financing.

The EMS assets of TFSEMS include "substantially all" of the company's Redmond manufacturing operations in, TFS said.

The agreement is subject to customary closing conditions and bankruptcy court approval. The parties anticipate that the transaction will close within the next 45-60 days.

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