EMCORE Corp. (EMKR) announced that it has entered into a share purchase agreement to create a joint venture with Tangshan Caofeidian Investment Corporation, a Chinese investment company.
The agreement provides for Tangshan Caofeidian to purchase a 60% interest in EMCORE's Fiber Optics business, excluding its satellite communications and specialty photonics fiber optics product lines, which will be operated as a joint venture once the transaction is closed. The new joint venture entity will be named EMCORE Fiber Optics Limited, and registered in Hong Kong.
The agreement provides for Tangshan Caofeidian to pay EMCORE approximately $27.8 million in cash and provide an additional funding of $27 million to EMCORE Fiber Optics after the closing. The transaction is expected to close within 90 days.
Over the next several years, the joint venture will focus on developing a high volume, low cost manufacturing infrastructure and a local customer support organization to better serve the expanding customer base in China and worldwide.
EMCORE's Executive Chairman and Chairman of the Board, Reuben Richards, Jr. will resign his position as Executive Chairman of EMCORE and will assume the role of CEO for EMCORE Fiber Optics. Certain other EMCORE senior executives and the employees currently working for the transferred product lines will be offered positions with EMCORE Fiber Optics. EMCORE's President and CEO, Hong Hou, will also serve as a Director of EMCORE Fiber Optics. Tangshan Caofeidian nominated Yi Li as Chairman of the Board for EMCORE Fiber Optics and Tangshan Caofeidian will name a CFO to EMCORE Fiber Optics subsequent to the closing.
EMCORE and Tangshan Caofeidian also entered into a supplemental agreement pursuant to which EMCORE agrees to establish its China terrestrial concentrator photovoltaics manufacturing and operations base in Caofeidian Industry Zone. The agreement includes a commitment by Tangshan Caofeidian Investment to provide EMCORE with the equivalent of US$3.3 million in RMB denominated loans, tax and rent incentives and assistance in developing EMCORE's solar power business in China.
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