AOS Announces Sale of Portion of JV Equity Interest and Financial Deconsolidation
December 07 2021 - 9:00AM
Business Wire
Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL)
today announced a transaction related to a sale of approximately
2.1% of the outstanding equity interest in the joint venture
company in Chongqing, China (the “JV Company”) to a third party
investor for an aggregate purchase price of RMB 108 million, or
approximately $16.9 million based on the currency exchange rate as
of December 1, 2021 (the “Transaction”). The Transaction was closed
on December 2, 2021. AOS is reducing its ownership to below 50% to
increase the flexibility of the JV Company to raise capital to fund
its future expansion. Following the Transaction and the successful
ramp up to its Phase I target run rate in the September quarter of
2021, as planned, the JV Company intends to raise up to $200
million through private funding rounds for its Phase II
expansion.
In addition to immediate private funding rounds, the JV Company
is also contemplating an eventual listing on the Science and
Technology innovAtion boaRd, or STAR Market, of the Shanghai Stock
Exchange. The Transaction assists the JV Company in meeting certain
regulatory listing requirements. A potential STAR Market listing
may take several years to consummate and there is no guarantee that
such listing by the JV Company will be successful or will be
completed in a timely manner, or at all.
As part of the Transaction, AOS’s right to designate directors
on the board of JV Company will be three (3) out of seven (7)
directors, instead of four (4) directors as provided under the JV
contract prior to the Transaction. As a result of the Transaction,
AOS has made a preliminary determination that the JV Company should
be deconsolidated from the consolidated financial statements of AOS
under applicable U.S. GAAP accounting rules. Going forward, the JV
Company will be accounted for under the equity method of
accounting.
The post-transaction 48.8% equity interest owned by AOS is
valued at approximately $391.4 million. The Transaction is expected
to result in a capital gain of approximately $364.8 million, net of
applicable taxes, for AOS, which will be recognized in the December
2021 quarterly income statement. The realized gain is expected to
result in an associated current tax payment of $2.2 million, while
the unrealized gain will result in a deferred tax liability.
The deconsolidation is not expected to have a material impact on
AOS’s operational financial performance. Our GAAP and non-GAAP
guidance for the December 2021 quarter remains unchanged. Please
note the gain and related taxes resulted from the Transaction and
the deconsolidation will be reflected in our GAAP income statement.
For non-GAAP financials, we intend to exclude the gain and the
future equity income (loss) from the equity investee.
AOS Chief Executive Officer Dr. Mike Chang commented, “This
Transaction is the next step in our plan for the JV Company. By
optimizing our shareholding structure, the JV company can enhance
its flexibility in future capital raising while AOS can continue to
access the JV Company’s manufacturing capacity as one of the key
customers. We believe it is in the best interests of all
stakeholders, including AOS shareholders who benefit from the value
we helped create at the JV Company. Our team will continue to
pursue a multi-faceted capacity expansion plan, which includes the
JV Company’s Phase II, a $100 million expansion of our Oregon fab,
and working closely with our foundry partners. We are excited about
our prospects for growth and are confident we will be able to reach
our mid-term goal of $1 billion in annual revenue by calendar year
2024/2025.”
For a more detailed description of the share transfer agreement
and related transactions, please see the Current Report on Form 8-K
filed by AOS on December 7, 2021. The assessment as to whether the
JV Company will be deconsolidated and measurement of the realized
gain is ongoing and will be finalized in conjunction with the
Company’s financial statement close process for the three months
ending December 31, 2021.
About AOS
Alpha and Omega Semiconductor Limited, or AOS, is a designer,
developer, and global supplier of a broad range of power
semiconductors, including a wide portfolio of Power MOSFET, IGBT,
IPM, TVS, HVIC, SiC/GaN, Power IC, and Digital Power products. AOS
has developed extensive intellectual property and technical
knowledge that encompasses the latest advancements in the power
semiconductor industry, which enables us to introduce innovative
products to address the increasingly complex power requirements of
advanced electronics. AOS differentiates itself by integrating its
Discrete and IC semiconductor process technology, product design,
and advanced packaging know-how to develop high-performance power
management solutions. AOS’s portfolio of products targets
high-volume applications, including portable computers, flat-panel
TVs, LED lighting, smartphones, battery packs, consumer and
industrial motor controls, automotive electronics, and power
supplies for TVs, computers, servers, and telecommunications
equipment. For more information, please visit www.aosmd.com.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections
of future performance based on management's judgment, beliefs,
current trends, and anticipated product performance. These
forward-looking statements include, without limitation, statements
relating to the proposed STAR listing of the JV Company; the impact
of deconsolidation on the Company’s financial results; the ability
of AOS to access sufficient manufacturing capacity; and the JV
Company’s plan to raise additional capital to fund its expansion
plan. Forward-looking statements involve risks and uncertainties
that may cause actual results to differ materially from those
contained in the forward-looking statements. These factors include,
but are not limited to, the impact of COVID-19 pandemic on our
business; our ability to successfully operate our joint venture in
China; our ability to develop and succeed in the digital power
business; difficulties and challenges in executing our
diversification strategy into different market segments; new
tariffs on goods from China; ordering pattern from distributors and
seasonality; changes in regulatory environment and government
investigation; our ability to introduce or develop new and enhanced
products that achieve market acceptance; decline of PC markets; the
actual product performance in volume production; the quality and
reliability of our product, our ability to achieve design wins; the
general business and economic conditions; the state of
semiconductor industry and seasonality of our markets; our ability
to maintain factory utilization at a desirable level; and other
risks as described in our SEC filings, including our Annual Report
on Form 10-K for the fiscal year ended June 30, 2021 filed by AOS
with the SEC and other periodic reports we filed with the SEC.
Other unknown or unpredictable factors or underlying assumptions
subsequently proving to be incorrect could cause actual results to
differ materially from those in the forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance, or achievements.
You should not place undue reliance on these forward-looking
statements. All information provided in this press release is as of
today's date, unless otherwise stated, and AOS undertakes no duty
to update such information, except as required under applicable
law.
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version on businesswire.com: https://www.businesswire.com/news/home/20211207005495/en/
Investor and media inquiries:
The Blueshirt Group Gary Dvorchak, CFA +86 (138) 1079-1480
gary@blueshirtgroup.com
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