Semiconductor-based components and satellite solar panel developer Emcore Corp is to sell its tunable laser and transceiver product lines to NeoPhotonics for US$17.5m.
The move is part of Emcore’s ongoing restructuring strategy that has seen it…
Semiconductor-based components and satellite solar panel developer Emcore Corp is to sell its tunable laser and transceiver product lines to NeoPhotonics for US$17.5m.
The move is part of Emcore’s ongoing restructuring strategy that has seen it offload a series of non-core assets to reduce costs and ultimately turn a profit. Last month the company agreed to sell its satellite solar panel assets to private equity firm Veritas Capital for US$150m in cash.
Under the terms of the purchase agreement with NeoPhotonics, Emcore will receive US$1.5m in cash at closing and US$16m in a two-year promissory note.
The note will bear interest of 5% for the first year and 13% per annum for the second year while the final amount payable will increase or decrease based on certain adjustments for inventory, net accounts receivable and pre-closing revenue levels.
The transaction is subject to customary closing conditions and is anticipated to be completed by early January 2015.
In fiscal year 2014, Emcore’s tunable laser and transceiver product lines represented approximately 25% of the company’s overall revenue. However, the product lines have not been historically profitable and their sale enables Emcore to eliminate the losses from its balance sheet and focus on its core semiconductor-based broadband fibre optics product portfolio.
Over the past two years, Emcore has agreed to sell five of its businesses in order to turnaround its fortunes.
At the same time, it sought to improve its capital structure, completing a one-for-four reverse stock split in February 2012 and then carrying out two share placements in October 2012 and September 2013.
In December 2013, the board of directors hired Raymond James to look at strategic options for the company. This has subsequently led to the sales of the space photovoltaics business and now the tunable laser and transceiver product lines.
The company’s management believes that the remaining business can achieve EBITDA break-even by September 2015 with some restructuring of corporate infrastructure.
Raymond James acted as exclusive financial adviser to Emcore on the product line sale, while Skadden, Arps, Slate, Meagher & Flom provided legal advice.
