CIRTEK Holdings Philippines Corp. (CHPC) will sell its semiconductor assembly and testing unit to an Indian buyer for $20.2 million (P1.29 billion) as it seeks to reduce debt and fund its remaining operating business.
“This transaction represents an important milestone in CHPC’s continuing effort to unlock value from its investments while strengthening our financial position,” Cirtek Executive Vice-President and Chief Financial Officer Brian Gregory Liu said in a stock exchange filing on Monday.
The listed technology company said its board approved the sale of all 155.51 million shares in Cirtek Electronics Corp. (CEC), representing 100% of the unit’s outstanding capital stock, to Sancode Semi Private Ltd.
Sancode will pay $11.32 million at closing for about 60% of the shares and the remaining $8.88 million within one year.
Cirtek said the shares covered by the second tranche would be placed in escrow until full payment is completed. The transaction remains subject to customary closing conditions.
The company plans to use part of the proceeds to repay bank loans and allocate the balance to the working capital requirements of Cirtek Advanced Technologies and Solutions, Inc. (CATSI), its remaining core operating unit.
Separately, Sancode plans to invest an additional $2 million in capital expenditures to upgrade CEC’s equipment and expand capacity.
The Indian company also intends to set aside $2.8 million for an employee benefit program aimed at retaining CEC’s workforce.
“The expected infusion of working capital will strengthen our ability to support ongoing operations, pursue growth initiatives and better serve our customers,” CATSI President Mark Wong said. “With a stronger financial foundation, CATSI will be in a better position to improve operational efficiency and capitalize on emerging market opportunities.”
Cirtek operates through CATSI, which provides design, engineering, manufacturing, testing and supply chain services for electronic equipment specializing in radio frequency, microwave and millimeter-wave technologies.
Cirtek shares rose 24.17% to P1.49 each. — Alexandria Grace C. Magno