News Coverage
AGY sells stake in AGY Shanghai to CPIC
2013-06-08 10:45:44
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On May 28, 2013, AGY Hong Kong Limited, a majority-owned subsidiary of AGY Holding Corp. (Aiken, S.C.) entered into an agreement to sell its 100 percent equity interest in AGY Shanghai Technology Co., Ltd. to Chongqing Polycomp International Corporation (CPIC/Fiberglass, Chongqing, China) for aggregate consideration in the amount of $1 million (USD). Under the terms of the agreement, AGY Shanghai is required to change its name within thirty days of closing of the divestiture to no longer use the AGY name (or the Chinese translation).

“We are very pleased to announce the agreement with CPIC to purchase our Shanghai business unit,” said Richard Jenkins, interim CEO of AGY. “This divestiture allows us to focus on delivering value to our customers with products produced in the U.S., including our fine yarns and S-2 products. We believe that this is an important step towards successfully implementing our business strategy to be a world-class producer of advanced materials.”

Drew Walker, AGY president, added, “Despite the sale of the Shanghai division, AGY will continue to focus on the rapidly-growing specialty electronics yam markets. AGY offers a valuable and expanding product set to meet the growing demand for new high-value glass that stems from the growth of next-generation mobile communication devices.”

The closing of the deal is subject to a number of conditions precedent, including receipt of the required government approvals and of consent from the Bank of Shanghai. The purchase agreement is subject to termination if the required governmental approvals for the divestiture are not obtained within three months or if the Bank of Shanghai does not give its written consent within 45 days. Subject to satisfaction or waiver of the conditions precedent to closing, the divestiture is expected to close during the third quarter of 2013, says AGY.

The transaction will result in a reduction in non-recourse debt totaling $38.8 million (USD) at March 31, 2013. The Company’s AGY U.S. and AGY Asia operating segments are managed separately based on differences in their manufacturing and technology capabilities, products and services and their end-markets as well as their distinct financing agreements. During the first quarter of 2013, AGY Asia production output accounted for less than 0.7 percent of the sales recognized by the AGY U.S. segment. Also on May 28, 2013, the Company and AGY Shanghai entered into an intellectual property license agreement, the term of which commences upon the closing of the divestiture, which grants AGY Shanghai an exclusive royalty-bearing, non-transferable and non-sublicensable license to make certain glass fiber yarn products that are manufactured by AGY Shanghai at its facilities using licensed know-how and to sell those products to customers located within Asia (excluding North Korea) and Australia for a period of three years from the closing of the announced deal. Following this three-year period, the license will become non-exclusive. In consideration for the license, AGY Shanghai will pay AGY Holding Corp.  an aggregate of $2.2 million (USD) in royalties.