TOPSIL SEMICONDUCTOR MATERIALS A/S Interim report, Q1 2016 1 January–31 March 2016
Topsil’s Board of Directors has signed an agreement to sell Topsil’s silicon business to GlobalWafers at a price of DKK 320 million. The agreement is subject to approval by the shareholders at the extraordinary general meeting to be held on 17 June 2016.
Over the past few years, Topsil has been seriously challenged by negative market developments, too expensive and too comprehensive long-term raw materials contracts and the failure of some of our sub-suppliers to meet our quality standards. Thanks to our efforts during the past few years to strengthen Topsil’s position within highly specialised float zone wafers for the power market, several major bidders have found our silicon business attractive despite our poor financial performance.
By becoming part of one of the leading players in the business, Topsil is taking a necessary step towards improving our competitive strength. The move will significantly reinforce our negotiating position in respect of major customers and suppliers, and GlobalWafers possesses the wafering technology that has previously caused us problems due to the failure of a sub-supplier to live up to our quality standards.
Kalle Hvidt Nielsen, CEO
Q1 HIGHLIGHTS
- On 20 May 2016, the Board of Directors signed a conditional agreement to sell Topsil’s silicon business to GlobalWafers for DKK 320 million on a debt-free basis.
- The selling price cannot yet be finally determined, being subject to specific factors, including the outcome of a patent dispute, a calculation of the value of Topsil’s inventories and the revenue of Topsil’s silicon business for the six months ending 30 June 2016. In a worst case assumption, this is believed to involve a possible reduction of the selling price in the order of 10%.
- Considering the transaction to be in the interests of shareholders, employees and other stakeholders, Topsil’s Board of Directors recommends that the Company’s shareholders approve the sale of the silicon business.
- If the sale is approved by the extraordinary general meeting to be held on 17 June 2016, Management will take steps to significantly trim the continuing business, which will comprise a Danish listed holding company, whose only activity will be the Polish property business, which is currently being prepared for sale.
- On completion of the transaction and repayment of its bank debt, payment of transaction costs and management changes, the listed company is expected to have at its disposal excess liquidity in the net amount of approximately DKK 110 million, equal to DKK 0.21 per share. The Board of Directors recommends that most of these cash funds be distributed to the company’s shareholders in the third quarter of 2016.
- As a result of the conditional agreement to sell Topsil’s silicon business, our reporting is to be divided into continuing and discontinued operations.
- Topsil reported a loss of DKK 92.5 million for the first quarter of 2016, of which DKK 88.0 million can be attributed to depreciation, amortisation and impairment of the assets of the silicon business in accordance with the anticipated selling price of the silicon activities.
OUTLOOK FOR 2016
Our expectations are based on the assumption that the sale of Topsil’s silicon business is approved by the extraordinary general meeting to be held on 17 June 2016.
If the divestment is completed effective 1 January 2016, revenue is therefore expected to amount to DKK 36 million, assuming that under the new ownership the Polish silicon business stays on as a tenant throughout 2016 and purchases utilities (hydrogen, power, water, etc.) from the property company in the same amounts as previously.
The divestment of the silicon business is expected to be finalised in the third quarter of 2016, following which steps will be taken to significantly trim the Danish listed holding company.
For the year as a whole, EBITDA is expected to amount to a loss of DKK 10-15 million, impacted by restructuring costs in the region of DKK 11 million.
If the sale of the silicon business falls through, sales efforts are expected to impact adversely on EBITDA.
Moreover, in order to implement its strategy and create additional value for its shareholders, Topsil will, the Board of Directors believes, require a significant capital contribution if the sale is not completed.
The full text of the announcement is attached in PDF.
The announcement has been prepared in a Danish-language and an English-language version. In the event of any discrepancies, the Danish version shall prevail.
Please direct any questions regarding this announcement to CEO Kalle Hvidt Nielsen or CFO Jesper Bodeholt through Susanne Hesselkjær, Executive Secretary, tel.: +45 2926 6752.
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