US-BASED Trans-India Acquisition Corporation (TIL) has signed a
definitive agreement to acquire over 80% stake in Solar Semiconductor,
a city-based solar photovoltaic modules maker. The deal is a
reversemerger agreement and valued at around $375 million. It will be
done through share-swap and the merger agreement is expected to get
regulatory approvals by February next year.
“The merger to will help us access the capital market as TIL is an American Stock Exchange-listed company. It will also help us get an additional cash reserve of $92 million,” said Solar Semiconductor president Hari Surapaneni.
Solar Semiconductor has cash reserves of around $5 million. With the new deal, the company will get more funds for its future growth including acquisitions.
The company is also planning to expand its PV module and solar cell manufacturing facility in Fab City in Hyderabad. “By this year-end we will invest $50 million and in 2009, we will need additional $80 million investment,” said Surapaneni.
Solar has recorded revenues of $15.2 million in fiscal 2008. This is expected to touch $140 million by next fiscal as the demand for solar energy is forecast to rise.
Trans-India is a public-private equity vehicle, where financial institutional investors (FIIs) hold a majority stake. It has a market capitalisation of about $120 million. It was set up so that investors can pool in money and acquire assets through merger, capital stock exchange or similar such business combinations.
As TIL does not have any operational existence, its shareholders can expect to reap dividends from the future growth of Solar Semi Conductor. The agreement now has to get approvals from TIL shareholders and US Securities and Exchange Commission.
Currently, share-holders having about 85% of the outstanding capital stock of Solar are party to the deal. According to the agreement, they will receive Trans-India common stock valued at $8 per share. However, both companies refused to divulge the share swap ratio. The purchase price will also depend on Solar Semiconductor’s future performance and its net income for fiscal 2010.
Post-merger, TIL will change its name to Solar Semiconductor. While the existing management of Solar will continue TIL board will face changes. On the merged entity’s board, Solar will have four members and TIL will designate one.
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