Business Context and Reporting Period
Company: TTM Technologies, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 13, 2013 (Event Date); March 18, 2013 (Signature Date)
Context: The Company entered into two Equity Interest Transfer Agreements with Shengyi Technology Co., Ltd. ("Sytech") regarding two joint ventures in Dongguan, China: Dongguan Meadville Circuits Limited ("DMC") and Dongguan Shengyi Electronics Ltd. ("SYE").
Key Financial Metrics and Transaction Values
This filing details a material definitive agreement involving cash consideration for equity transfers. No revenue, profit, or cash flow metrics for the Company's ongoing operations are provided in this specific document.
- DMC Transaction: TTM Technologies China Limited (TTMC) will acquire Sytech's 20% equity interest in DMC for RMB180 million (approximately USD 29 million).
- SYE Transaction: Sytech will acquire TTMC's 70.2% equity interest in SYE for RMB702 million (approximately USD 113 million).
- Net Cash Impact: The Company expects to receive a net cash inflow of approximately USD 84 million (USD 113 million inflow minus USD 29 million outflow) upon closing.
- Exchange Rate Used: RMB 6.2142 per USD 1.00 (as of March 13, 2013).
Material Changes and Transaction Structure
The Transactions represent a strategic restructuring of the Company's joint ventures in China:
- Post-Transaction Ownership: Upon consummation, TTMC will own 100% of DMC, and Sytech will own 100% of SYE.
- Business Focus: Both DMC and SYE are primarily engaged in the manufacturing of conventional printed circuit boards.
- Comparison to Prior Period: This filing reports a new material agreement; it does not provide comparative financial performance data against prior periods.
Outlook, Risks, and Contingencies
Timeline: The parties anticipate closing the Transactions by the end of the second quarter of 2013.
Conditions Precedent: Closing is subject to:
- Approval by the boards of directors of DMC and SYE.
- Approval by the boards of directors and shareholders of TTMC and Sytech.
- Approvals from relevant PRC authorities.
Risks and Termination: The Transfer Agreements will terminate if necessary approvals and registrations under PRC laws are not obtained, unless the failure is caused intentionally or by the material fault of a party. In the event of fault-based termination, the at-fault party is liable for losses suffered by the other party.
Key Facts for Investor Verification
- Verify the receipt of regulatory approvals from PRC authorities, which are required for closing.
- Confirm the actual closing date, currently anticipated for Q2 2013.
- Monitor the final exchange rate at the time of closing, as the USD values are estimates based on the March 13, 2013 rate.
- Review the full text of the Transfer Agreements (to be filed as an exhibit to the Q1 2013 Form 10-Q) for detailed covenants and conditions.
- Assess the impact of consolidating 100% of DMC and divesting SYE on future consolidated financial statements.