October 8, 2007
Nam Tai Electronics, Inc., will seek to reorganize the group structure of its subsidiaries in an effort to realize several benefits similar to Nam Tai’s proposed privatization of two subsidiaries in 2005. The proposed reorganization requires a series of transactions, involving capital shares and asset transfers, among Nam Tai, Nam Tai Electronic & Electrical Products Limited (NTEEP), J.I.C. Technology Company Limited, Zastron Precision Tech Limited, and various subsidiaries.
The integrated EMS provider’s interest in NTEEP will drop about 6% to 67.71%. Interest in Zastron, currently at 100%, will also drop to 67.71%. Nam Tai’s investment in J.I.C. will remain at 74.99%. J.I.C. will sell Jetup Interest to Nam Tai; NTEEP will sell Namtek Interests to J.I.C.; and Nam Tai will then sell Zastron Interest and Jetup Interest to NTEEP.
The company asserts that reorganizing will result in a more simplified group structure; facilitate greater understanding by investors and analysts of the components of Nam Tai, metrics of its group operations, and the enterprise as a whole; centralize resources allocation; reduce post-transaction overhead costs; and strengthen management control. Restructuring will reportedly avoid the probable cash outlay of approximately $120 million to $150 million, which would have been required to privatize the Hong Kong Stock Exchange-listed subsidiaries.
Nam Tai would receive approximately $38.5 million in cash and interest income from the convertible bond to be issued by NTEEP.
The reorganization proposal was approved by the board of directors from Nam Tai, NTEEP, and J.I.C. It requires approval from the majority of public shareholders in NTEEP and J.I.C.; therefore, the companies will hold meetings on the subject in November. The management of NTEI Group, Zastron, NTEEP, and J.I.C. report that they consider a centralized management of all manufacturing businesses, with greater economies of scale, would be beneficial to continued growth of the combined electronics assembly, display, software, and subassemblies businesses as a whole.
After the reorganization, J.I.C. is expected to realize an estimated profit of approximately HK$200 million ($25.6 million U.S.) from the sale of Jetup Interest. NTEEP would centralize all the manufacturing businesses of NTEI, which could double the existing scale of NTEEP. Yu Ming Investment Management Limited advised Nam Tai financially in the decision.
Source: www.namtai.com
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