SDK and TS Opto concluded an absorption-type company split agreement.
(Since this is a case of "simplified absorption-type company split" involving SDK and its wholly owned subsidiary, part of the details are omitted from the scope of disclosure.)
1. Purpose of company split
GaN LEDs are used in many applications, including LCD TV/PC backlight and illumination, and their demand is expected to grow in the coming years. As the market requires more energy-saving and lower-cost product, it is necessary for GaN LED manufacturers to improve LED brightness and production efficiency while expanding supply capacity.
Under the circumstances, SDK had already reached basic agreement with Toyoda Gosei Co., Ltd. (Toyoda Gosei), a world leader in the GaN LED business, to establish a joint venture in order to strengthen the business. This time, SDK has decided to transfer its GaN LED business to TS Opto effective December 1, 2012 through an absorption-type company split, and transfer 70% of common shares in TS Opto to Toyoda Gosei on the same date, thereby making TS Opto a joint venture between SDK and Toyoda Gosei. The absorption-type company split is a measure to achieve the above-mentioned goal.
2. Outline of company split
(a) Schedules, SDK approved the absorption-type company split agreement at its board meeting, and TS Opto approved the same agreement at its shareholders' meeting. Also, the agreement was concluded between the two companies. The agreement is scheduled to take effect on December 1, 2012.
Note: This transaction falls under the category of a simplified company split for SDK, which is the splitting company. Thus, SDK will not refer the company split agreement to its shareholders' meeting for approval.
(b) Method of split This will be an absorption-type company split, with SDK serving as the splitting company and TS Opto as the succeeding company.
(c) Allotment of TS Opto shares following the company split TS Opto will deliver 19,400 common shares to SDK at the time of the absorption-type company split.
(d) Handling of share options and bonds with share options, for the splitting company While SDK has issued Euro-Yen convertible bonds with warrants (with subordination clause) due 2014, this transaction will have no influence.
(e) Change in capital stock following the split There will be no increase or decrease in the amount of SDK's capital stock.
(f) Rights and obligations to be transferred With regard to the rights and obligations pertaining to SDK's GaN LED business, TS Opto will succeed to rights and obligations as defined in the absorption-type company split agreement.
(g) Prospect for the discharge of liabilities As for the liabilities TS Opto will assume following the absorption-type company split, we consider that there will be no problem with regard to their discharge.
3. Profile of the two companies involved in the company split agreement (As of October 23, 2012)
Note: Figures for the sections from net assets through net income per share for SDK are based on its statement of accounts for the fiscal year ended December 31, 2012.
4. Outline of the business division to be split
(a) Scope of business subject to split: SDK's production of GaN LED epitaxial wafers and chips
(b) Performance of the business division to be split (as of December 31, 2011): Net sales: ¥ 5,322 million (While sales activities will not be transferred to TS Opto, SDK will stop selling GaN LEDs as of the effective date, in principle.)
(c) Items of assets and liabilities to be split, and their amounts (as of December 31, 2011):
Current assets: None Current liabilities: ¥ 182 million
Noncurrent assets: ¥ 1,500 million Noncurrent liabilities: None
5. Situation of the listed company and the succeeding company after split
6. Future prospect
This company split will have only slight influence on SDK's consolidated and non-consolidated performance. There is no change in our consolidated performance forecast for 2012 due to this absorption-type company split.
