AXT Second Tranche Private Equity Investment in China Largely Complete
January 06 2021 - 9:05AM
AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound
semiconductor substrates, today announced that the second tranche
of the private equity investment in its wafer manufacturing company
in China, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”),
was largely completed in December 2020. The second
tranche investment was originally scheduled to fund in January
2021. In December, seven private equity firms invested
approximately $25 million in the second tranche. An additional $1.5
million is expected to be invested in January 2021, closing the
second tranche at approximately $26.5 million. The first tranche,
totaling approximately $22.5 million, funded in November 2020. Upon
the completion of the final $1.5 million investment, the capital
raise will total approximately $49 million in exchange for an
approximately 7.28 percent minority interest in Tongmei.
AXT previously announced on November 16, 2020 a
strategic plan to access China’s capital markets and progress to an
initial public offering by Tongmei on the Shanghai Stock Exchange’s
Sci-Tech innovAtion boaRd (the “STAR Market”). To qualify for a
STAR Market listing, Tongmei is required to have multiple
independent shareholders. The first major step in this process is
engaging reputable private equity firms in China to invest funds in
Tongmei.
“We are pleased that the second tranche
participants accelerated the investment schedule,” said Morris
Young, CEO. “Their strong support and enthusiasm underscore the
exciting applications and customer opportunities for which we are
preparing this year, and their investment is an important milestone
in Tongmei’s progress toward a STAR Market IPO in 2022.”
The process of going public on the STAR Market
includes several periods of review and, therefore, is a lengthy
process. Tongmei does not expect to accomplish this goal until
mid-2022. AXT has posted on its website a brief summary of the plan
and the process. The listing of Tongmei on China’s STAR Market will
not change the status of AXT, Inc. as a U.S. public company
headquartered in Fremont, California. It will continue to be listed
on the Nasdaq Global Select Market under the symbol AXTI.
About AXT, Inc. AXT is a material science
company that develops and manufactures high-performance compound
and single element semiconductor substrate wafers comprising indium
phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). The
company’s substrate wafers are used when a typical silicon
substrate wafer cannot meet the performance requirements of a
semiconductor or optoelectronic device. End markets include 5G
infrastructure, data center connectivity (silicon photonics),
passive optical networks, LED lighting, lasers, sensors, power
amplifiers for wireless devices and satellite solar cells. AXT’s
worldwide headquarters are in Fremont, California where the company
maintains its sales, administration and customer service
functions. AXT has manufacturing facilities in China
and, as part of its supply chain strategy, has partial ownership in
ten companies in China producing raw materials. For more
information, see AXT’s website at http://www.axt.com.
Forward-Looking Statements
The foregoing paragraphs contain forward-looking
statements within the meaning of the Federal securities laws,
including, for example, statements regarding an additional $1.5
million that is expected to be invested in the second tranche in
January 2021, completing other preliminary steps in connection with
the proposed listing of shares of Tongmei on the STAR Market, being
accepted to list shares of Tongmei on the STAR Market and the
timing and completion of such listing of shares of Tongmei on the
STAR Market. Additional examples of forward-looking statements
include statements regarding the market demand for our products,
our growth prospects and opportunities for continued business
expansion, including technology trends and new applications, our
market opportunity and ability to compete for business
opportunities, elevating our manufacturing, enhancing our business
processes and financial structure, our relocation and our
expectations with respect to our business prospects and financial
results. These forward-looking statements are based upon
assumptions that are subject to uncertainties and factors relating
to the company’s operations and business environment, which could
cause actual results to differ materially from those expressed or
implied in the forward-looking statements contained in the
foregoing discussion. These uncertainties and factors include, but
are not limited to: the withdrawal, cancellations or requests for
redemptions by private equity funds in China of investments in
Tongmei, the timing of receipt of additional funds into Tongmei,
the administrative challenges in satisfying the requirements of
various government agencies in China in connection with the
investments in Tongmei and the listing of shares of Tongmei on the
STAR Market, continued open access to companies to list shares on
the STAR Market, investor enthusiasm for new listings of shares on
the STAR Market and geopolitical tensions between China and the
United States. Additional uncertainties and factors include, but
are not limited to, the timing and receipt of significant orders;
the cancellation of orders and return of product; emerging
applications using chips or devices fabricated on our substrates;
end-user acceptance of products containing chips or devices
fabricated on our substrates; our ability to bring new products to
market; product announcements by our competitors; the ability to
control costs and improve efficiency; the ability to utilize our
manufacturing capacity; product yields and their impact on gross
margins; the relocation of manufacturing lines and ramping of
production; possible factory shutdowns as a result of air pollution
in China; COVID-19 or other outbreaks of a contagious disease;
tariffs and other trade war issues; the financial performance of
our partially owned supply chain companies; policies and
regulations in China; and other factors as set forth in the
company’s Annual Report on Form 10-K, quarterly reports on Form
10-Q and other filings made with the Securities and Exchange
Commission. Each of these factors is difficult to predict and many
are beyond the company’s control. The company does not undertake
any obligation to update any forward-looking statement, as a result
of new information, future events or otherwise.
Contacts:
Gary FischerChief Financial Officer(510)
438-4700
Leslie
Green Green
Communications Consulting, LLC(650) 312-9060
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