MagnaChip Completes Sale Of Foundry Services Group And Fab 4
MagnaChip Semiconductor Corporation has announced that certain of its wholly owned subsidiaries have completed the previously announced sale of the Company's Foundry Services Group and the factory in Cheongju ("Fab 4") to Key Foundry Co., Ltd. ("Buyer"), for a purchase price equal to approximately $350.6 million, which includes a positive working capital adjustment of approximately $5.9 million. The purchase price was paid in a combination of U.S. Dollars in the amount of $46.5 million and Korean Won in the amount of approximately KRW 360.6 billion.
In addition to the purchase price, Buyer assumed all severance liabilities relating to the transferred employees, which have a value of approximately $100 million. Buyer is a wholly owned subsidiary of Magnus Semiconductor, LLC ("Magnus"), which was established by Alchemist Capital Partners Korea Co., Ltd. and Credian Partners, Inc. On April 20, 2020, Magnus assigned, and Buyer assumed, all rights and obligations of Magnus under the business transfer agreement relating to this transaction.
The Company intends to use approximately $227.4 million of the net proceeds to fully redeem all of its outstanding 6.625% Senior Notes due 2021, of which $224.25 million principal amount was outstanding as of August 31, 2020.
MagnaChip's Chief Executive Of cer, YJ Kim, said: "This represents a pivotal chapter for MagnaChip as we are transforming into a streamlined, pure-play standard products company focused on the attractive growth opportunities in our Display and Power businesses. We will use a portion of the net proceeds from the sale to de-leverage by paying off $224.25 million of our outstanding debt, eliminating a substantial portion of our annual interest expense. With sharpened focus and an improved balance sheet, we are committed to strive for sustainable and profitable growth."
"The Board of Directors is pleased with the successful close of the transaction," said Camillo Martino, Chairman of the Board of MagnaChip. "The company is positioning for continued future success, enhancing our shareholders' value."