Talking about the decision to sell its 50% interest in Suzhou NSG AFC Thin Films Electronics Co., Ltd. (STEC), Applied Films“ President and CEO Thomas T. Edman praised the venture but said it was no …
Talking about the decision to sell its 50% interest in Suzhou NSG AFC Thin Films Electronics Co., Ltd. (STEC), Applied Films“ President and CEO Thomas T. Edman praised the venture but said it was no longer considered a core business. Applied Films announced 28 November 2005 the sale of its stake in STEC to joint venture partner Nippon Sheet Glass for USD 14.6 million. “This has been an excellent partnership and investment for Applied Films throughout the last six years. Although we have achieved a positive return on investment from this joint venture and place great value on our relationship with our partners, Nippon Sheet Glass Company, Ltd., we believe a Joint Venture for the coating of Glass is no longer core to our business and strategy. Our Joint Venture partner, NSG, has an excellent management team and we are confident that STEC will provide real strategic value for them,” said Mr. Edman. The transaction is subject to approval from the Chinese government, expected to arrive within the next 25 days. Because the price is below the current book value of the joint venture (Applied Films original investment plus its share of STEC“s undistributed profit), Applied Films will take an impairment charge on the net assets associated with the investment. This pretax charge is estimated to be in the range of USD 1.7 – USD 1.9 million in the current quarter. Going forward, Applied Films will no longer record equity earnings from the joint venture.