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AOS Announces Sale of Portion of JV Equity Interest and Financial Deconsolidation
SUNNYVALE, Calif.--(BUSINESS WIRE)-- Alpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today announced a transaction related to a sale of
About this update from Alpha And Omega Semiconductor Limited
[{"type":"text","content":" SUNNYVALE, Calif.--(BUSINESS WIRE)--\nAlpha and Omega Semiconductor Limited (“AOS”) (NASDAQ: AOSL) today announced a transaction related to a sale of approximately 2.1% of the outstanding equity interest in the joint venture company in Chongqing, China (the “JV Company”) to a third party investor for an aggregate purchase price of RMB 108 million, or approximately $16.9 million based on the currency exchange rate as of December 1, 2021 (the “Transaction”). The Transaction was closed on December 2, 2021. AOS is reducing its ownership to below 50% to increase the flexibility of the JV Company to raise capital to fund its future expansion. Following the Transaction and the successful ramp up to its Phase I target run rate in the September quarter of 2021, as planned, the JV Company intends to raise up to $200 million through private funding rounds for its Phase II expansion.\n\nIn addition to immediate private funding rounds, the JV Company is also contemplating an eventual listing on the Science and Technology innovAtion boaRd, or STAR Market, of the Shanghai Stock Exchange. The Transaction assists the JV Company in meeting certain regulatory listing requirements. A potential STAR Market listing may take several years to consummate and there is no guarantee that such listing by the JV Company will be successful or will be completed in a timely manner, or at all.\n\nAs part of the Transaction, AOS’s right to designate directors on the board of JV Company will be three (3) out of seven (7) directors, instead of four (4) directors as provided under the JV contract prior to the Transaction. As a result of the Transaction, AOS has made a preliminary determination that the JV Company should be deconsolidated from the consolidated financial statements of AOS under applicable U.S. GAAP accounting rules. Going forward, the JV Company will be accounted for under the equity method of accounting.\n\nThe post-transaction 48.8% equity interest owned by AOS is valued at approximately $391.4 million. The Transaction is expected to result in a capital gain of approximately $364.8 million, net of applicable taxes, for AOS, which will be recognized in the December 2021 quarterly income statement. The realized gain is expected to result in an associated current tax payment of $2.2 million, while the unrealized gain will result in a deferred tax liab...