Magnachip Semiconductor Corp. has signed an agreement to sell its foundry business, two manufacturing facilities and its factory in Cheongju, South Korea, to a special purpose company (SPC).
The SPC in South Korea established by Alchemist Capital Partners Korea Co. Ltd and Credian Partners Inc. will purchase the foundry business for about $435 million, consisting of $344.7 million in cash and severance liabilities for the employees who will be transferred together, which is estimated at about $90 million.
Magnachip said it intends to use the net proceeds from the transaction to significantly reduce debt and strengthen its balance sheet.
"Importantly, it will allow us to meaningfully improve our balance sheet, and fully focus as a pure-play standard products company on the attractive high-growth opportunities in our Display Solutions and Power Solutions business lines,” said YJ Kim, CEO of Magnachip. “We look forward to building upon our leadership position in the OLED display driver business and are excited about the emerging microLED space. Our power products portfolio, including premium power products, are aligned with the needs of a broad range of markets, and are ideally suited to serve the requirements of the electric vehicle segment of the auto market. Finally, we are confident there will also be myriad benefits for the foundry business and its employees, who will have significant new opportunities as a result of the transaction."
The SPC will serve as joint general partners of a project fund while its limited partners consist of SK Hynix. After closing, about 1,500 employees of Magnachip will be transferred to the SPC.