Cirtek sells $20.2M unit to cut debt

Cirtek Holdings Philippines Corp. is selling its entire stake in Cirtek Electronics Corp. (CEC) to an Indian company for $20.2 million to reduce debt, improve liquidity, and free up capital for its remaining core business.

In a statement on Monday, the listed semiconductor firm said its board approved the sale of 155.51 million shares, representing 100 percent ownership of CEC, to India-based Sancode Semi Private Ltd.

Cirtek plans to use part of the proceeds to pay down outstanding bank loans, while the remaining funds will support the working capital needs of Cirtek Advanced Technologies and Solutions Inc. (CATSI), its core remaining operating subsidiary.

“This transaction represents an important milestone in CHPC’s continuing effort to unlock value from its investments while strengthening our financial position,” Cirtek Executive Vice President and Chief Financial Officer Brian Gregory Liu said.

“The sale allows us to reduce debt, enhance liquidity, and focus our resources on strategic opportunities that will drive long-term growth. We are encouraged that this will bring additional foreign investment into the Philippines and support the continued modernization and expansion of CEC’s operations under Sancode’s ownership.”

Under the agreement, Sancode will pay $11.32 million for approximately 60 percent of CEC’s shares upon closing.

The remaining $8.88 million, covering approximately 40 percent of the shares, will be paid within one year from the closing date. These shares will remain in escrow until full payment is completed.

The transaction remains subject to customary closing conditions.

Sancode also plans to invest an additional $2 million to upgrade CEC’s equipment and expand production capacity, signaling continued investment in its Philippine operations.

Another $2.8 million will be allocated to an employee benefit plan intended to retain CEC’s entire existing workforce.

For Cirtek, the divestment will allow the company to concentrate its resources on CATSI, which specializes in design, engineering and manufacturing solutions for radio frequency, microwave and millimeter-wave technologies.

CATSI President Mark Wong, on the other hand, said the additional funding would help strengthen the subsidiary’s operations and support expansion.

“We are excited about the opportunities this transaction creates for CATSI. The expected infusion of working capital will strengthen our ability to support ongoing operations, pursue growth initiatives, and better serve our customers.

With a stronger financial foundation, CATSI will be in a better position to improve operational efficiency and capitalize on emerging market opportunities. We look forward to leveraging these additional resources to support our next phase of growth.”