Item 1.01
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Entry into a Definitive Material Agreement.
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Implementation Agreement
On August 17, 2016, SunEdison Semiconductor Limited, a corporation organized under the laws of Singapore (the
Company
), entered into an
Implementation Agreement (the
Implementation Agreement
) with GlobalWafers Co., Ltd. (
Globe
) and GWafers Singapore Pte. Ltd. (
Acquiror
), that provides for the acquisition by the Acquiror of all
issued and outstanding ordinary shares of the Company (other than those held by Globe, Acquiror or their respective subsidiaries) (the
Transaction
) for US$12.00 per share in cash (the
Transaction Price
). The
Transaction will be structured as a Scheme of Arrangement under Singapore law (the
Scheme
), and is subject to the terms and conditions contained in the Implementation Agreement, including approval of the Companys
shareholders. Globe has the right, however, subject to the prior written consent of the Company and required clearance from the Securities Industry Council of Singapore (the
SIC
), to elect to effect the Transaction by way of a
tender offer pursuant to the terms and conditions set forth in the Implementation Agreement.
The Implementation Agreement provides for cash payments in
respect of equity securities in the form of options and restricted stock units (
RSUs
) which were previously granted by the Company to its employees and directors under the Companys equity incentive plans. At the effective
time of the Transaction, (i) each unexercised and outstanding option to acquire Company ordinary shares will be deemed fully vested and be converted into the right to receive cash equal to the excess, if any, of the Transaction Price per share
over the exercise price per share for each such option, and (ii) each issued and outstanding RSU will vest and be converted into the right to receive cash equal to the Transaction price per ordinary share covered by such RSUs, in each case with
such amounts to be paid less any required withholding taxes. Performance-vesting RSUs will be deemed to vest at 100% of target level.
The Company and
Globe have each made customary representations, warranties and covenants to each other in the Implementation Agreement. These include covenants by the Company (i) to use commercially reasonable efforts to conduct its business in the ordinary
course during the period between the execution of the Implementation Agreement and the consummation of the Transaction and (ii) to file the Scheme of Arrangement with the High Court of the Republic of Singapore (the
Court
)
and a proxy statement with the Securities and Exchange Commission (
SEC
), and (iii) to convene a meeting of its shareholders to consider and vote upon the Scheme of Arrangement.
In addition, the Company is subject to customary no-shop restrictions on its ability to solicit alternative acquisition proposals from third
parties and to provide information to and engage in discussions with third parties regarding alternative acquisition proposals, subject to a fiduciary duty exception in certain circumstances prior to approval of the Scheme by the
Companys shareholders.
Globe has agreed to use its reasonable best efforts to obtain acquisition financing pursuant to debt commitment letters
entered into by Globe in connection with the Transaction prior to the execution of the Implementation Agreement, and the Company has agreed to reasonably cooperate with Globe to obtain such financing. The debt commitment letters provide that the
proceeds are to be used to fund payment of the Transaction Price to consummate the Transaction and to fund payment of the Companys primary credit facility (see below).
The completion of the Transaction is subject to various customary conditions, including (i) obtaining the approval of the Companys shareholders,
(ii) the approval of the Scheme of Arrangement by the Court, (iii) the absence of any applicable legal requirements prohibiting the Transaction, (iv) the expiration or termination
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of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain other antitrust and regulatory approvals (including clearance or approval
of the Transaction by the Committee on Foreign Investment in the U.S. (known as CFIUS)), (v) subject to certain exceptions, the accuracy of the representations and warranties of each party, and (vi) the performance in all material respects
by each party of its obligations under the Implementation Agreement. Globes ability to obtain the acquisition financing is not a condition to the completion of the transaction.
Each of the Company and Globe has certain termination rights pursuant to Implementation Agreement. If the Implementation Agreement is terminated under certain
circumstances specified in the Implementation Agreement, including if the Companys board of directors determines to change its recommendation with respect to the Transaction, or terminate the Agreement in order to enter into an agreement for a
superior offer, the Company may be required to pay Globe a termination fee equal to approximately US$19.2 million. If the Implementation Agreement is terminated under certain circumstances specified in the Implementation Agreement, including the
failure of Globe to obtain necessary financing in connection with the Transaction or the failure to obtain CFIUS, antitrust or other specified regulatory approvals, the Company may be entitled to a reverse termination fee of US$40 million. Globe has
deposited US$40 million with Mega International Commercial Bank Co., Ltd., as escrow agent and account bank, to fund the reverse termination fee to the Company if it becomes payable under the terms of the Implementation Agreement.
The foregoing description of the Implementation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of
the Implementation Agreement, a copy of which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.
There are representations and
warranties in the Implementation Agreement that were made by the parties to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Implementation Agreement and may be
subject to important qualifications and limitations agreed by the respective parties in connection with negotiating the terms of the Implementation Agreement. In addition, certain representations and warranties may not be accurate or complete as of
any specified date because they were subject to a contractual standard of materiality that is different from certain standards generally applicable to stockholders or were used for the purposes of allocating risk between the respective parties
rather than establishing matters as facts. For the foregoing reasons, no person should rely on the representations and warranties as statements of factual information at the time they were made or otherwise, and all investors should read the
Implementation Agreement, together with the other information concerning the Company and Globe the Company publicly files in reports and statements with the SEC.
Limited Consent to Credit Agreement
In connection with
the Companys entry into the Implementation Agreement, on August 17, 2016 the Company entered into a Limited Consent to Credit Agreement (the
Consent
) with SunEdison Semiconductor B.V., the Companys subsidiary
guarantors party thereto and lenders party thereto. The Consent pertains to the Companys Credit Agreement (
Credit Agreement
), dated as of May 27, 2014, by and among the Company, SunEdison Semiconductor B.V., the lenders
party thereto, Goldman Sachs Bank USA, as Administrative Agent, Sole Lead Arranger and Sole Syndication Agent, and Goldman Sachs Bank USA and Macquarie Capital (USA) Inc., as joint bookrunners, and, subject to the conditions contained therein,
provides that the Companys entry into the Implementation Agreement will not constitute violations of certain negative covenants under the Credit Agreement. The Consent does not permit the closing of the Transaction prior to payment of all then
outstanding indebtedness under the Credit Agreement.
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