Emcore to Sell Fiber Optics Interest
ALBUQUERQUE, N.M., February 8, 2010 – Emcore Corp., a provider of compound semiconductor-based components, subsystems and systems for the fiber optic and solar power markets, announced that investment company, Tangshan Caofeidian Investment Corporation (TCIC), will purchase 60 percent interest in Emcore’s Fiber Optics business.
Emcore’s Fiber Optics business (excluding its satellite communications and specialty photonics fiber optics product lines) will be operated as a joint venture once the transaction is closed and the new entity will be name Emcore Fiber Optics, Limited (EFO).
TCIC, located in Caofeidian Industry Zone, Tangshan City, Hebei Province of China, will pay Emcore approximately $27.8 millionin cash and provide and additional funding of $27 million to EFO after the closing. Caofeidian Industry Zone is a fast developing area in the strategic Bohai Rim Economical Region with a total investment of $ 26.4 billion, and hosts a large number of corporations and enterprises, including China Capital Steel and Sinopec.
The Fiber Optics businesses included in this transaction are Emcore's telecom, enterprise, cable TV, fiber-to-the-premises and video transport product lines.
Under the terms of the agreement Reuben F. Richards, Jr., Emcore's executive chairman will resign his position and will assume the role of CEO for EFO. In addition, certain other Emcore senior executives and the employees currently working for the transferred product lines will be offered positions with EFO. Dr. Hong Q. Hou, Emcore's president and CEO, will also serve as a director of EFO, providing strategic and operational oversight to the joint venture.
TCIC nominated Dr. Yi Li as chairman of the board for EFO and TCIC will name a CFO to EFO subsequent to the closing.
Over the next several years, the joint venture will focus on developing a high volume, low cost manufacturing infrastructure and a local customer support organization to better serve the expanding customer base in China and worldwide. According to the company, TCIC has committed to providing additional funding support for the JV's future strategic growth through acquisitions.
"This is one of the most transformational transactions in the history of Emcore," stated Hou. "This transaction creates two well capitalized, industry-leading companies within their respective industries and will enable Emcore to focus on growing its photovoltaic and defense/homeland security businesses. This strategy was put into motion more than two years ago by our Board of Directors. We are very pleased to be entering into this joint venture with TCIC and look forward to continuing to expand our Fiber Optics business and creating value for our shareholders."
The transaction is expected to close within 90 days pending relevant government and regulatory approvals and the approvals of the boards of directors of both parties.
In conjunction with the establishment of the joint venture, Emcore and TCIC also entered into a supplemental agreement pursuant to which Emcore agrees to establish its China terrestrial concentrator photovoltaics manufacturing and operations base in Caofeidian Industry Zone. The agreement includes a commitment by TCIC to provide Emcore with the equivalent of $3.3 million in RMB denominated loans, tax and rent incentives and assistance in developing Emcore's solar power business in China.
For more information, visit: www.emcore.com
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