Applied Optoelectronics (AAOI) to sell Chinese manufacturing facilities and transceiver company assets for $150 million

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Applied Optoelectronics, Inc. (NASDAQ: AAOI) today announced that it has entered into a definitive agreement (the “Agreement”) with Yuhan Optoelectronic Technology (Shanghai) Co., Ltd. (the “Buyer” or “Yuhan”) for the sale of its manufacturing facilities located in the People’s Republic of China and certain assets related to its transceiver business and its multi-channel optical subassembly products for the markets internet data centers, telecommunications and FTTH for a purchase price of $150 million, less a holdback amount. The Company expects the transaction to close in 2023 and is subject to customary closing conditions and regulatory approvals.

“The significant proceeds from this transaction will allow us to make strategic investments in higher margin and growth opportunities,” said Dr. Thompson Lin, Founder, President and Chief Executive Officer of Applied Optoelectronics Inc. reflection, we have concluded that it is in the best interests of the company and our shareholders for AOI to exit the transceiver market and focus our resources on our CATV business and the manufacture of lasers and laser components for the center data, CATV, telecom and FTTH markets Additionally, we believe this transaction opens new opportunities for customer expansion with our existing data center laser business, which has a large addressable market.

“I would like to thank our team in China for their hard work and contributions over the years. We are proud of the transceiver business we have built and look forward to its growth under the ownership of Yuhan Optoelectronic Technology,” Lin said.

“This transaction is part of our plan to accelerate our path to profitability,” said Dr. Stefan Murry, Chief Financial Officer and Chief Strategy Officer of Applied Optoelectronics Inc. “We intend to use the majority of proceeds from the sale to increase investment in the business, particularly in our fast-growing CATV business and some of our new laser-related products. In addition to the sale, we look forward to further collaboration with Yuhan Optoelectronic Technology through a contract manufacturing agreement for the production of select AOI CATV products, and look forward to continuing to supply center lasers. data for the production of Yuhan’s data center transceivers. »

Reason for the transaction

  • The transaction generates significant proceeds, which will allow AOI to make strategic investments in higher margin and growth opportunities.
  • Following the transaction, AOI will have a targeted portfolio of lasers. Additionally, the Company will retain its manufacturing facilities in Taiwan and Sugar Land, Texas.
  • The transaction opens new opportunities for customer expansion with AOI’s existing data center laser business.

The Transaction has been unanimously approved by the Board of Directors of the Company.

Product Supply Agreement and Contract Manufacturing Agreement

As part of the agreement, Yuhan Optoelectronic Technology (Shanghai) Co., Ltd. plans to use AOI’s lasers in the production of its data center transceiver products. In addition, AOI plans to continue to use manufacturing facilities in China on a contract basis to produce certain CATV products.

Product use

Prior to the closing of this transaction, AOI expects to invest an amount equal to between 4% and 10% of the estimated proceeds of the transaction in exchange for a 10% equity interest in the buyer. Further details regarding this investment will be subject to further negotiation between the parties.

AOI currently intends that the remainder of the net proceeds of the transaction be used for general working capital purposes.

Conference call information

Management will hold a conference call today at 5:00 p.m. Eastern / 4:00 p.m. Central on Thursday, September 15 to discuss the transaction. The call can be accessed by dialing 844-890-1794 (domestic) or 412-717-9586 (international). A live audio webcast of the conference call along with presentation materials will also be available on the Company’s website at investors.ao-inc.com. Following the webcast, an archived version will be available on the website for one year. A telephone replay of the call will be available one hour after the call and will be available until September 22, 2022 at 11:59 p.m. Eastern Time / 10:59 p.m. Central Time and can be accessed by dialing 877- 344-7529 (domestic) or 412-317-0088 (international) and entering the access code 1628423.

China International Capital Corporation Limited acted as exclusive financial advisor to AOI in connection with this transaction.

Forward-looking information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as “believe”, “may”, “estimate”, “continue ,” “anticipate”, “intend”, “should”, “could”, “would”, “target”, “seek”, “aim”, “predict”, “think”, “goals”, ” optimistic”, “new”, “goal”, “strategy”, “potential”, “is likely”, “should”, “expects”, “plans”, “project”, “allowed”, or by others similar expressions that convey uncertainty of future events or results.These statements include management’s beliefs and expectations regarding the timing of closing of the transaction with Yuhan Optoelectronic Technology (Shanghai) Co., Ltd. These forward-looking statements involve risks and uncertainties, as well as current assumptions and expectations, which could cause er the real growth of society. that actual results differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include, but are not limited to: the process and timing associated with seeking and obtaining regulatory approvals for the transaction with Yuhan Optoelectronic Technology (Shanghai) Co., Ltd. ; the timing of the satisfaction of the closing conditions of this transaction; the impact of the COVID-19 pandemic on our business and financial results; reducing the size or quantity of customer orders; change in demand for the company’s products due to industry conditions; changes in manufacturing operations; fluctuations in intercompany debt between AOI’s China subsidiary and AOI and its other affiliated entities; manufacturing cost volatility; delays in product shipments; supply chain disruptions; change in the rate of design success or the rate of acceptance of new products by customers; the company’s dependence on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers’ products or their rate of deployment of their products; general terms and conditions in the Internet data center, cable television (CATV), broadband, telecommunications or fiber-to-the-home (FTTH) markets; developments in the global economy (particularly in the United States and China); changes in international trade regulations and taxation, including the imposition of customs duties; changes in exchange rates; the negative effects of seasonality; and other risks and uncertainties described in more detail in the company’s documents filed with or provided to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. More Information about these and other risks that may impact the company’s business is set forth in the “Risk Factors” section of the company’s quarterly and annual reports filed with the Securities and Exchange Commission. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements contained in this press release are based on information available to us as of the date hereof and are qualified in their entirety by this cautionary statement. Except as required by law, we undertake no obligation to update forward-looking statements for any reason after the date of this press release in order to conform these statements to actual results or to changes in the expectations of the society.

About Applied Optoelectronics:

Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI’s products are the building blocks of broadband fiber optic access networks around the world, where they are used in the Internet data center, CATV broadband, telecommunications and FTTH markets. AOI supplies lasers, components and optical networking equipment to Tier 1 customers in these four markets. In addition to its corporate headquarters, wafer manufacturing, and advanced engineering and production facilities in Sugar Land, Texas, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, Texas. China. For more information, visit www.ao-inc.com.

Contact with Investor Relations:

The Blueshirt Group, Investor Relations Lindsay Savarese+1-212-331-8417 [email protected]

Cassidy Fuller+1-415-217-4968 [email protected]

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Source: Applied Optoelectronics, Inc.


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