Mainboard-listed Asti Holdings has agreed to sell its core semiconductor technology and instrument businesses - collectively known as STI Group - for $90 million in cash plus an additional $38 million in dividends, to Shanghai Pudong Science and Technology Investment (PDSTI). This consideration is subject to adjustments for changes to the disposed businesses' balance sheet and expected profitability.
PDSTI will pay 80 per cent or $72 million of the amount once the transaction has been completed.
A further $9 million is conditional upon the actual net asset value of STI Group being equal or higher than $69 million; while the remaining $9 million is subject to a profit guarantee, with STI Group making profits (before taxes) of no less than $17 million in 2018 and 2019.
STI Group is principally engaged in research, design, development, manufacturing and marketing of semiconductor equipment.
PDSTI is a Shanghai-based investment company specialising in domestic and overseas investments in high-tech industries.
The deal includes the disposal of several of Asti's regional subsidiaries. Prior to the disposal, ownership of the subsidiaries in Malaysia, the Philippines, Taiwan and Korea will be transferred from Asti to its unit Semiconductor Technologies & Instruments (STI SG).
Asti said yesterday that the deal realises the value that it has built in the STI Group over the years, which is substantially higher than the book value of $50.6 million as of Dec 31 last year. News of the disposal sent Asti shares soaring 30.1 per cent to 9.5 cents yesterday.
Earnings per share are expected to rise to 6.65 cents after the proposed disposal, against a loss per share of 0.67 cent before the disposal. Net tangible asset per share is also expected to increase to 14.44 cents from 7.09 cents.
The deal will also allow Asti to substantially reduce its liabilities, improve its gearing and have more working capital to fund its operations and undertake new investment opportunities, the firm said.
Estimated net proceeds from the proposed disposal after deducting expenses will be $72.8 million.