Cirtek unloads electronics unit for $20M

Cirtek Holdings Philippines Corp. seeks to sell its electronics subsidiary to an Indian company for $20.2 million, with proceeds earmarked for debt payments and the working capital needs of its remaining core business.

In a regulatory filing on Monday, Cirtek said its board approved the sale of its entire stake in Cirtek Electronics Corp. (CEC) to India-based Sancode Semi Private Ltd., subject to standard closing conditions.

The transaction covers 155.51 million common shares, representing 100 percent of CEC’s issued and outstanding capital stock.

Under the share purchase agreement, Sancode will pay cash in two tranches.

Payment terms

The first payment of $11.32 million, covering around 60 percent of CEC’s shares, is due at closing.

The remaining $8.88 million, covering about 40 percent, is payable within one year from the closing date.

Those shares will remain in escrow until payment is completed.

Cirtek will use part of the proceeds to partially settle outstanding bank loans.

The balance will fund the working capital requirements of Cirtek Advanced Technologies and Solutions Inc. (CATSI), its core remaining operating subsidiary.

“The sale allows us to reduce debt, enhance liquidity and focus our resources on strategic opportunities that will drive long-term growth,” said Cirtek executive vice president and chief financial officer Brian Gregory Liu.

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Beyond the purchase price, Sancode intends to allocate an additional $2 million in capital expenditure to upgrade CEC’s equipment and expand operating capacity.

It will also earmark $2.8 million for an employee benefit plan intended to retain CEC’s entire existing workforce.

CATSI president Mark Wong said the expected working capital infusion would support operations, customer requirements and growth initiatives.

CATSI provides design, engineering, manufacturing, testing, tuning and supply chain solutions for highly integrated box build equipment. It specializes in radio frequency, microwave and millimeter wave technologies.