Hi-P International said on Sunday that Electric Connector Technology (ECT) has agreed to acquire a 60 percent stake in Hi-P’s wholly owned subsidiary Hi-Flex (Suzhou) Electronics, or Hi-Flex SZ, for 112.5 million yuan, via the subscription to new equity.
At the same time, ECT and Hi-P’s wholly owned subsidiary Hi-P Flex entered a shareholders’ agreement which each other and with Hi-Flex SZ to regulate their rights and obligations as shareholders of Hi-Flex SZ, it said in a filing to SGX on Sunday.
Hi-P Flex will hold the remaining 40 percent of Hi-Flex SZ’s enlarged share capital, it said.
Hi-Flex SZ, a wholly owned subsidiary of Hi-P Flex, produces and sells flexible printed circuit boards, or PCB, and provides related technological and after-sales services, it said.
The proposed investment can be used for any future capital expenditure to upgrade existing machinery and equipment of the PCB business and other general working capital uses, the filing said.
“The PCB business has not been profitable in the past years, primarily due to lack of orders,” the statement said. “The proposed investment presents a rare opportunity for the group to be able to induct new management with the relevant expertise and business network, including additional working capital.”
It noted that ECT is an electronics manufacturer with a strong record in the connector manufacturing business, which is synergistic to the PCB business.
After the deal, Hi-Flex SZ will cease to be a direct subsidiary of Hi-P Flex and an indirect subsidiary of Hi-P International and will instead become an associated company of Hi-P Flex, the statement said.