SEOUL, South Korea,
March 30, 2020 /PRNewswire/ --
MagnaChip Semiconductor Corporation ("MagnaChip" or the
"Company") (NYSE: MX) today announced that certain of its
wholly-owned subsidiaries have entered into a definitive agreement
(the "Agreement") to sell the Company's Foundry Services Group and
the factory in Cheongju ("Fab 4"), the larger of the Company's two
8" manufacturing facilities (collectively, the "Target Business"),
to a special purpose company (the "SPC") in South Korea established by Alchemist Capital
Partners Korea Co., Ltd. ("Alchemist") and Credian Partners, Inc.
("Credian", and together with Alchemist, "AC Consortium").
Under the terms of the Agreement, the total transaction value is
approximately $435 million,
consisting of the South Korean won equivalent of $344.7 million in cash based on the exchange rate
on the third business day prior to the closing date of the
transaction and the SPC's assumption of statutory severance
liabilities attributable to the employees who will be transferred
together with the Target Business, which is currently estimated to
be approximately $90 million (subject
to the then-effective exchange rate). The cash purchase price is
subject to a customary working capital adjustment. MagnaChip
anticipates it will use net operating loss carryforwards to offset
a portion of the tax obligations related to this transaction.
Moreover, the Company intends to use the net proceeds from the
transaction to significantly reduce debt and strengthen its balance
sheet. Taken together, the transaction-related tax exposure is
estimated to be up to 15% of the net cash proceeds from the
transaction.
MagnaChip's Chief Executive Officer, YJ Kim, said: "This is an
excellent outcome for all our stakeholders, including customers,
employees and investors. Importantly, it will allow us to
meaningfully improve our balance sheet, and fully focus as a
pure-play standard products company on the attractive high-growth
opportunities in our Display Solutions and Power Solutions business
lines. We look forward to building upon our leadership position in
the OLED display driver business and are excited about the emerging
MicroLED space. Our Power products portfolio, including Premium
Power products, are aligned with the needs of a broad range of
markets, and are ideally suited to serve the requirements of the
Electric Vehicle segment of the auto market. Finally, we are
confident there will also be myriad benefits for the Foundry
business and its employees, who will have significant new
opportunities as a result of the transaction."
Under the terms of the Agreement, the SPC will acquire the
Target Business. Alchemist and Credian serve as joint general
partners of a project fund that established the SPC, while its
limited partners consist of SK hynix Inc., one of the largest
semiconductor companies in the world, and Korean Federation of
Community Credit Cooperatives. Upon the closing of the transaction,
approximately 1,500 MagnaChip employees are expected to be
transferred to the SPC, which would result in SPC assuming
approximately $90 million (subject to
the then-effective exchange rate) in statutory severance
liabilities recorded on MagnaChip's balance sheet. The Agreement is
subject to customary closing conditions.
"After conducting a thorough strategic evaluation process
of the Foundry business and Fab 4, the Board of Directors and
management team concluded that this transaction was the best option
to maximize value for our shareholders," said Nader Tavakoli, Chairman of the Board of
MagnaChip.
"Following the completion of this sale, MagnaChip will be
streamlined operationally, largely freed of interest expense and we
believe will be ideally positioned for continued future
success."
MagnaChip is the largest independent supplier of organic light
emitting diodes (OLED) display driver integrated circuits (DDICs)
to the world's top two panel manufacturers for smartphones. The
Company's large portfolio of OLED DDICs includes multiple
28-nanometer display drivers with the industry's lowest power, a
key requirement for smartphones, including upcoming 5G and foldable
models. The Company's Power Solutions business is a leading
provider of standard products, including battery field effect
transistors (FETS) to increase power efficiency in smartphone
batteries, as well as premium products such as super junction metal
oxide semiconductor field effect transistors (MOSFETs),
insulated-gate bipolar transistors (IGBTs) and power integrated
circuits for consumer, TV, communications and industrial
applications. The Company will continue to operate its Power
Discrete 8" fab (Fab 3, located in Gumi, Korea) used primarily to
manufacture wafers for Power standard products and non-OLED display
products.
Approvals
The transaction is expected to close within approximately four
to six months, subject to customary closing conditions.
Advisors
J.P. Morgan Securities LLC served as financial advisor and Paul,
Weiss, Rifkind, Wharton & Garrison LLP and Kim & Chang
served as legal counsel to MagnaChip. Samsung Securities Co., Ltd.
served as financial advisor, Lee & Ko and KL Partners served as
legal counsel and Samjong KPMG served as accounting advisor to the
AC Consortium.
MagnaChip to Host a Conference Call on Tuesday, March 31 at 9 am ET
The conference call will be webcast live on Tuesday, March 31, 2020 at 9:00 a.m. ET, and is available by dialing toll-free at
1-844-413-0952. International call-in participants can dial
1-216-562-0462. The conference ID number
is 3388826. Participants are encouraged to initiate
their calls at least 10 minutes in advance of the 9 a.m. ET start time to ensure a timely connection.
The webcast and press release will be accessible at
www.magnachip.com. A replay of the conference call will be
available the same day and will run for 72 hours. The replay
dial-in numbers are 1-404-537-3406 or toll-free at
1-855-859-2056. The access code is 3388826.
About MagnaChip Semiconductor Corporation
MagnaChip is a designer and manufacturer of analog and
mixed-signal semiconductor platform solutions for communications,
IoT, consumer, industrial and automotive applications. The
Company's Standard Products Group and Foundry Services Group
provide a broad range of standard products and manufacturing
services to customers worldwide. MagnaChip, with more than 40 years
of operating history, owns a portfolio of approximately 2,950
registered patents and pending applications, and has extensive
engineering, design and manufacturing process expertise. For more
information, please visit www.magnachip.com. Information on or
accessible through, MagnaChip's website is not a part of, and is
not incorporated into, this release.
Safe Harbor for Forward-Looking Statements
Information in this release regarding the Company's forecasts,
business outlook, expectations and beliefs are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties. All
forward-looking statements included in this release are based upon
information available to the Company as of the date of this
release, which may change, and we assume no obligation to update
any such forward-looking statements. These statements are not
guarantees of future performance and actual results could differ
materially from our current expectations. A number of important
factors could cause actual results to differ materially from those
indicated in such forward-looking statements. These factors
include, but are not limited to, (i) the risk that the transaction
may not be completed in a timely manner or at all, (ii) the
possibility that any or all of the various conditions to the
consummation of the transaction may not be satisfied or waived,
(iii) the occurrence of any event, change or circumstance that
could give rise to the termination of the Agreement, (iv) the
effect of the announcement or pendency of the transaction on the
Company's ability to retain and hire key personnel, its ability to
maintain relationships with its customers, suppliers and others
with whom it does business, or its operating results and business
generally, (v) the risk that revenues following the transaction may
be lower than expected, (vi) the risk that operating costs,
customer loss, and business disruption (including, without
limitation, difficulties in maintaining relationships with
employees, customers, and suppliers) may be greater than expected,
(vii) the assumption of unexpected risks and liabilities, (viii)
the outcome of any legal proceedings that may be instituted related
to the Agreement or the transaction, (ix) the diversion of and
attention of management of the Company on transaction-related
issues, and (x) other risks detailed from time to time in the
Company's filings with the SEC, including our
Form 10-K filed on February 21, 2020 and subsequent
registration statements, amendments or other reports that we may
file from time to time with the SEC and/or make available on our
website. The Company assumes no obligation and does not intend to
update the forward-looking statements provided, whether as a result
of new information, future events or otherwise. Accordingly, you
should not place undue reliance on these forward looking
statements.
CONTACTS:
|
|
In the United
States:
Bruce
Entin
Investor
Relations
Tel.
+1-408-625-1262
Investor.relations@magnachip.com
Or
Dan Zacchei / Alex
Kovtun
Sloane &
Company
+1-212-446-1882 /
+1-212-446-1896
dzacchei@sloanepr.com /
akovtun@sloanepr.com
|
In
Korea:
Chankeun
Park
Director, Public
Relations
Tel.
+82-2-6903-5223
chankeun.park@magnachip.com
|
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SOURCE MagnaChip Semiconductor Corporation