CIRTEK Holdings Philippines Corp. (CHPC) is selling its entire stake in subsidiary Cirtek Electronics Corp. (CEC) to India-based Sancode Semi Private Ltd. for $20.2 million (about P1.29 billion), with proceeds partly earmarked for debt repayment and working capital.
Cirtek Holdings on Monday said its board approved the sale of 155.51 million common shares, representing 100 percent of CEC’s issued and outstanding capital stock, subject to standard closing conditions.
Under the share purchase agreement, the purchase price will be paid in two tranches, with $11.32 million due at closing and the remaining $8.88 million payable within one year from the closing date. The shares covered by the second tranche will be held in escrow until full payment is completed.
Cirtek Holdings said part of the proceeds would be used to partially settle its outstanding bank loans, while the remainder would support the working capital requirements of Cirtek Advanced Technologies and Solutions Inc. (Catsi), its core remaining operating subsidiary.
“This transaction represents an important milestone in CHPC's continuing effort to unlock value from our investments while strengthening our financial position,” Brian Gregory Liu, Cirtek Holdings executive vice president and chief financial officer, said.
“The sale allows us to reduce debt, enhance liquidity, and focus our resources on strategic opportunities that will drive long-term growth,” Liu added.
Sancode also intends to allocate an additional $2 million for capital expenditures to upgrade CEC’s equipment and expand its operating capacity. It will also earmark $2.8 million for an employee benefit plan designed to retain CEC’s existing workforce.
Mark Wong, Catsi president, said the expected working capital infusion would help the subsidiary support its operations and pursue growth initiatives.
“With a stronger financial foundation, Catsi will be in a better position to improve operational efficiency and capitalize on emerging market opportunities,” Wong said.
Cirtek Holdings said the transaction would strengthen its financial position while supporting Catsi’s growth and bringing additional foreign investment into the Philippine semiconductor and technology industries.
Through Catsi, Cirtek Holdings provides design, engineering, manufacturing, testing and supply chain services for integrated electronic equipment, specializing in radio frequency, microwave and millimeter-wave technologies.
Following news of the planned sale of CEC, Cirtek Holdings shares surged P0.29, or 24.17 percent, to close at P1.49 each on Monday.