Epistar Corp (晶電), one of the nation’s leading suppliers of LED epitaxial wafers and chips, yesterday said its board of directors has approved a plan to book asset impairment of about NT$3.96 billion (US$139.3 million), before the formation of a holding company with Lextar Electronics Corp (隆達) tomorrow.
The asset impairment would have no significant effect on its operations and cash position, Epistar said.
The company’s balance sheet is healthy, with cash and cash equivalents of NT$6.51 billion, and its debt ratio was 26.3 percent at the end of September, a regulatory filing showed.
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Epistar and Lextar, which makes LED modules and provides downstream packaging services, are to form Ennostar Inc (富采投控) through a share swap, with the firms becoming wholly owned subsidiaries of the new entity, but they would continue to operate independently.
Epistar’s board in yesterday’s meeting reviewed the assessment results of the asset impairment per the company’s business plans.
The plans focus on the development and manufacturing of new display technologies, such as mini-LED and micro-LED, which would be essential to its business, it said.
“The assets acquired by the company in 2014 from Formosa Epitaxy Inc (璨圓光電) were mainly for the production of LED products, which are in a highly competitive situation, and the chances of switching that production line to high-quality mini-LED and micro-LED manufacturing are low,” Epistar said in the filing.
“After the company conducted an asset impairment test according to IFRS 36, the board of directors agreed to deduct all NT$3.18 billion of goodwill from the acquisition of Formosa Epitaxy and other related fixed assets by NT$350 million as asset impairment,” it said.
The board also decided to book NT$430 million of impairment losses for the shares of a Unity Opto Technology Co (東貝光電) subsidiary that were pledged as collateral for accounts receivable due to the unit’s deteriorating operations, Epistar said.
The overall asset impairment of NT$3.96 billion is expected to affect the company’s earnings per share for last year by NT$3.7, the company said.
The company reported a net loss of NT$3.25 per share in the first three quarters of last year.
Looking ahead, the company said it would focus on mini-LED, micro-LED displays, smart sensing and automotive applications, adding that the mass sales of mini-LED would begin this year and revenue is expected to grow substantially from last year.
Epistar and Lextar are to delist from the Taiwan Stock Exchange tomorrow, and the new holding company is to debut on the exchange at NT$82.8 per share.
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