OMX Nordic Exchange Copenhagen 01.10.2008
Nikolaj Plads 6
1067 København K
No. 15/08
Topsil is completing acquisition of Cemat in Poland
Today, Topsil signed agreements to acquire 95.92% of the share capital in Cemat
Silicon S.A. The purchase price of the shares totals PLN 74.8m, corresponding
to DKK 164.4m.
Topsil anticipates that the remaining 4.08% of the share capital, which is held
by the neighbour and founder of Cemat Silicon, ITME (Institute of Electronic
Materials Technology), can be acquired by Topsil on similar terms. It is
expected to conclude a final agreement on acquisition of the remaining shares
during the coming months.
Topsil expects to take over management of Cemat Silicon S.A. in end-October
2008, and as announced in stock exchange announcement No.13/08 the former CFO
of Topsil in the period 2004-2007, Martin Overgaard Hansen, will be appointed
CEO of Cemat Silicon S.A.
In the fourth quarter of 2008 Cemat Silicon is expected to contribute with a
turnover of about DKK 30m. After allowing for restructurings and nonrecurring
costs of approximately DKK 2m in connection with the acquisition, a break-even
result (EBIT) is predicted in Cemat Silicon for the accounting year 2008.
Cemat Silicon S.A.
Cemat Silicon owns about 53% of the share capital in Cemat70, who is a real
estate company and owner of the buildings, in which Cemat runs its operations.
Apart from Cemat Silicon Cemat70 has approximately 60 leases, and has a major
rental business. Cemat70's property is situated in the centre of Warsaw. In
order to concentrate resources on the company's core business, being silicon
production, Topsil will investigate the possibilities of selling the ownership
interest in Cemat70 within the coming 9-12 months.
With its 260 employees, Cemat Silicon S.A. had a turnover corresponding to DKK
123m in 2006 and DKK 150m in 2007. In the same period the results (EBIT) were
DKK 2m and DKK 5m respectively. The subsidiary Cemat70 S.A., had a turnover of
DKK 29m in 2006 and DKK 36m in 2007. The results (EBIT) amounted to DKK 2m and
DKK 3m respectively. The estimate for Cemat Silicon's turnover and result in
2008 is expected to be lower than the 2007 level.
The historical numbers of Cemat70 S.A. are not consolidated in the accounts of
Cemat Silicon S.A. A consolidation will be made as from the takeover date.
Synergies and expectations for Cemat Silicon S.A.
Cemat Silicon has existed as an independent company since 1992, but operated in
the market for Czochralski silicon under governmental administration as far
back as the beginning of the 1960'ies. Cemat Silicon therefore has a very
extensive knowledge of silicon production, and Czochralski production in
particular.
It is Topsil's expectation that at the time of acquisition of Cemat the synergy
potentials amount to about DKK 25m per year (EBIT). However, nonrecurring
costs, including restructuring and IT-upgrading costs, are expected to exceed
the synergies to be achieved in the accounting year 2009. Consequently, Cemat
Silicon is expected to contritute with a break-even result (EBIT) in 2009.
Topsil anticipates that a substantial part of the synergies can be realised as
from 2010, and as from 2012 all synergies are expected to have full effect.
It is expected to achieve considerable synergies through:
• A change of product mix in Cemat's present sales platform,
• ”In-sourcing” of wafering of selected specifications, which is today being
processed by subsuppliers, and
• A general streamlining of production and business procedures.
The last-mentioned synergy will primarily be achieved via the volume, that
Topsil will be adding to Cemat Silicon's wafering processing.
Financing
As mentioned in stock exchange announcement No. 13/08 Topsil wishes to finance
a substantial part of the acquisition by means of credit finance. The company
has secured a total credit finance of DKK 145m, of which a major part is
granted as an acquisition loan, and the remaining part as an extension of the
company's existing overdraft facility.
The remaining part of the purchase amount, and the subsequent share purchase
from ITME, will be financed through the company's own resources.
It is the company's expectation that a future realisation of the ownership in
Cemat70 S.A. will reduce the company's borrowing requirement considerably.
A stronger Topsil Semiconductor Materials A/S
After the implementation of the transaction Topsil has gained a considerably
stronger position as a supplier of silicon wafers to the semiconductor
industry.
A complementary product range for medium and high power
Cemat Silicon has a strong product range, especially within EPI wafers produced
on Czochralski silicon, and this product range is complementing Topsil's
existing business areas. With this Topsil can offer an extended product range
to its customers. The employees of Cemat Silicon contribute with an extensive
knowlegde and strong competences within silicon production based on the
Czochralski technology. Looking forward the efforts in product and process
development will be composed of employees from Cemat Silicon and Topsil
respectively, which will strengthen the knowledge, competences, and the
innovation in Topsil.
Better utilisation of the production equipment
Cemat Silicon S.A. is producing silicon based on the Czochralski technology,
which is today's most common silicon technology. Through the acquisition of
Cemat Silicon S.A. Topsil will master both technologies, and will thereby
ensure a wider production platform.
With the acquisition of Cemat Silicon Topsil will have 2 production plants at
its disposal, which means that it will be easier to scale a future production,
as Topsil sees potentials of being able to expand the existing float zone as
well as the Czochralski production in Poland.
Czochralski as substrate for (FZ) Float Zone production
Topsil regards it a big advantage to be able to use the far cheaper Czochralski
material as a potential raw material in the future float zone production. One
of the largest float zone producers in the world market has already been
successful in using CZ material as raw material in its FZ production. Topsil
assesses to be able to improve its competitive and business position
correspondingly in the coming years by using Czochralski as raw material. In
order to continue the expansion of the float zone business the fundamental and
totally necessary platform has been established through the acquisition of
Cemat.
Research and development
The company Cemat Silicon is founded by silicon scientists, and originates from
the research institute ITME, whose 230 scientists are working next door to
Cemat Silicon. This fact has enabled Cemat Silicon to research, develop, make
tests, etc. in cooperation with ITME, who is researching in electronic
materials and is employing 25-30 scientists, who are only working with silicon.
Furthermore, ITME is working with EPI and other substrates, including silicon
carbide and gallium nitride. They are both substrates that Topsil is
contemplating to investigate further in the coming years with a view to new
business opportunities.
Positive effect on future raw material contracts
Topsil has a clear expectation, that the acquisition of Cemat Silicon will
place Topsil/Cemat in a considerably better position in its existing efforts of
concluding long-term agreements on supplies of poly silicon for production of
float zone as well as Czochralski in the coming years.
Future expectations
Based on above facts company expects a turnover in 2008 ranging from DKK
250-270m and maintains its expectations for a profit before tax in 2008 of DKK
50-60m.
In the long term it is the intention to increase the production volume and
turnover of Czochralski as well as float zone silicon considerably, and Topsil
considers the acquisition of Cemat Silicon the first step in that direction.
Topsil Semiconductor Materials A/S
Jens Borelli-Kjær Keld Lindegaard Andersen
Chairman CEO
Questions may be posed to:
Jens Borelli-Kjær, Chairman, tel. +45 40 16 14 82
Keld Lindegaard Andersen, CEO, tel +45 21 70 87 72
Martin Overgaard Hansen, CEO of Cemat Silicon S.A. , tel. +45 40 21 62 99.
Please note that this translation is provided for convenience only. The Danish
version shall prevail in case of discrepancies.
