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MagnaChip Semiconductor to sell foundry business and Fab 4

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Christian Fernsby ▼ | March 31, 2020
MagnaChip Semiconductor Corporation announced that certain of its wholly-owned subsidiaries have entered into a definitive agreement to sell the Company's Foundry Services Group and the factory in Cheongju (Fab 4), the larger of the company's two 8" manufacturing facilities (collectively, the target business).
MagnaChip Semiconductor
South Korea   MagnaChip Semiconductor Corporation
That will be sold to a special purpose company (the SPC) in South Korea established by Alchemist Capital Partners Korea and Credian Partners (together with Alchemist, AC Consortium).

Topics: MagnaChip Semiconductor

Under the terms of the Agreement, the total transaction value is approximately $435 million, consisting of the South Korean won equivalent of $344.7 million in cash based on the exchange rate on the third business day prior to the closing date of the transaction and the SPC's assumption of statutory severance liabilities attributable to the employees who will be transferred together with the Target Business, which is currently estimated to be approximately $90 million (subject to the then-effective exchange rate).

The cash purchase price is subject to a customary working capital adjustment.

MagnaChip anticipates it will use net operating loss carryforwards to offset a portion of the tax obligations related to this transaction.

Moreover, the Company intends to use the net proceeds from the transaction to significantly reduce debt and strengthen its balance sheet.

Taken together, the transaction-related tax exposure is estimated to be up to 15% of the net cash proceeds from the transaction.