Vedanta Ltd’s wholly owned subsidiary, Cairn India Holdings Ltd (CIHL), will invest $158 million in Japanese manufacturer for LCD glass substrate, AvanStrate Inc (ASI), currently majority owned by the Carlyle Group.
The transaction consists of three elements — an acquisition of $151 million in existing ASI debt with face value of $299 million from banks, an acquisition of just over 51 per cent of the equity stake of ASI for a nominal consideration from the Carlyle Group and extension of a $7-million loan to ASI. “Through a combination of these elements, the transaction provides both strategic control and attractive returns to CIHL. Completion of the acquisition is conditional on consents being obtained from ASI’s existing lenders and is expected to occur prior to December 31,” said a press statement.
ASI is a leading global manufacturer of glass substrates for small and medium- sized high resolution thin film transistor liquid crystal display (TFT LCD) panels, which are used in screens for devices including smartphones, satellite navigation systems in vehicles, cameras, flat screen televisions, tablets and laptop personal computers. Glass substrate is made of silicon and metallic oxides, including aluminium oxides.
“Further to Vedanta’s focus on providing basic materials for the development of India and other emerging markets, this transaction provides optionality to the growing market of materials for technology applications. ASI is particularly focused on supplying glass substrate to small and medium sized TFT LCD panels, used in many mobile devices, and India has significant market potential for such devices,” the statement said.
ASI also has operations in Korea and Taiwan. The company employs around 710 people and in the financial year ended March 31, 2017 the company had revenues of $169 million, EBITDA of $75 million and gross assets of $625 million.
The consolidated net profit of ASI for the financial year ended March 31, 2017 was $1.4 million, which on a proportionate basis, for the 51 per cent equity stake being acquired, would imply an attributable net profit of $0.7 million.