Ascend Acquisition (stock symbol: ASAQ.OB), which raised gross proceeds of $42.4 million when it went public in May 2006, has announced that it has signed an agreement to acquire e.Pak Resources, a "full-service supplier of semiconductor transfer and handling products."
Ascend Acquisition Corporation to Acquire e.PAK Resources (S) Pte. Ltd.
Tuesday July 31, 9:00 am ET
WAYNE, Pa. and AUSTIN, Texas, July 31 /Xinhua-PRNewswire/ -- Ascend Acquisition Corp. ("Ascend") (OTC Bulletin Board: ASAQ - News, ASAQU - News, ASAQW - News), a specified purpose acquisition company, today announced that it has signed a definitive agreement to acquire e.PAK Resources (S) Pte. Ltd. ("ePAK"), a privately held, full-service supplier of semiconductor transfer and handling products.
Under the terms of the agreement, at the closing of the acquisition, Ascend will reincorporate as a Bermuda public company and acquire 100% of the outstanding capital stock of ePAK. In the acquisition, ePAK's shareholders and certain other persons will receive approximately 8.6 million shares of the common stock of the post-transaction public company, representing approximately 50% of the outstanding common stock immediately after the acquisition, subject to adjustment as provided in the agreement. ePAK's shareholders also will be eligible to receive additional shares post-closing based on various criteria.
Following the closing of the transaction, the post-transaction public company will be renamed ePAK International Ltd. It is expected that ePAK International's common stock and warrants will trade on the NASDAQ Global Market.
ePAK Overview
ePAK was established in 1999 by a team of semiconductor industry veterans. ePAK's product areas include IC transport, wafer, and electronic systems handling. The company's products are sold globally to a blue chip customer list of semiconductor companies, equipment suppliers, and assembly and test vendors. The company's low-cost, large-scale manufacturing operations in Shenzhen, PRC are centrally located to the semiconductor industry. ePAK is based in Austin, TX and maintains nine sales offices worldwide.
For the fiscal year ended December 31, 2006, ePAK generated revenue of approximately $36.2 million, net income of $2.5 million and EBITDA of $5.6 million. Since 2002, ePAK has achieved compound annual growth rates ("CAGR") in revenues and EBITDA of 30% and 106%, respectively. Net income grew at a 135% CAGR from 2003 through 2006.
Following the closing of the transaction, Steve Dezso, ePAK's current CEO, also will become the CEO of ePak International. Don K. Rice, Ascend's current Chairman of the Board and CEO, will serve as Chairman of the Board of ePak International. The other members of ePAK's senior management team will continue in their existing roles with ePAK and will assume similar offices with ePak International.
Mr. Dezso commented, "We built ePAK from the ground up, creating a customer focused business model dedicated to quality, service and consistent delivery. In an industry where our customers' ability to realize their time critical revenues in a reliable manner is crucial, our ability to provide dependable, innovative solutions and on-time delivery have been the main drivers behind our financial performance. The proposed business combination with Ascend will provide ePAK with the financial resources we need to accelerate our capacity expansion, continue to introduce new mission critical
products such as those for protecting and handling high purity 300 mm silicon, and to pursue other opportunities for growth."
Mr. Rice said, "Ascend was targeting a business combination in the manufacturing, distribution or service industry with a highly experienced management team with a proven record of financial performance, and strong prospects for growth. With ePAK, we have also found an industry leader with a strong balance sheet at an attractive price. We believe ePAK is the ideal choice and are confident that ePAK's management team will utilize the additional capital to accelerate growth and deliver exceptional financial performance in the future."
The Transaction
Pursuant to the agreement, ePAK's common stockholders and holders of ePAK's parent company's stock options and other rights (collectively, the "ePAK's stockholders") will receive shares and options exercisable into shares aggregating approximately 8.6 million shares of ePak International, the post- transaction public company.
ePAK's stockholders will also be entitled to receive, on an all or none basis, an additional 88,525 shares, for each of the next three fiscal years beginning with the fiscal year ending December 31, 2008, if the combined company achieves the following EBITDA targets:
FY Ending December 31, EBITDA Target
2008 $14,727,000
2009 $24,268,000
2010 $37,935,000
As additional consideration, ePAK's stockholders will be entitled to receive up to 442,625 shares if the last reported sales price on any twenty trading days during any consecutive thirty day trading period within six months of the closing of the transaction meets or exceeds the following values:
Share Price Trigger Number of Market Price Shares
$6.00 88,525
$6.50 88,525
$7.00 88,525
$7.50 88,525
$8.00 88,525
In addition, ePAK stockholders will be entitled to 442,625 shares upon the redemption of ePAK International's publicly traded warrants and its corresponding receipt of funds.
In connection with the closing of the transactions, expected in the fourth quarter of 2007 or first quarter of 2008, Ascend will be amalgamated with its wholly owned Bermuda subsidiary, Ascend Company Limited, with the company continuing after the amalgamation being renamed ePAK International Ltd. and existing as public company domiciled in Bermuda. Common stock and warrants of ePAK International will be issued in exchange for all of the outstanding common stock and warrants of Ascend, on a one-for-one basis. Accordingly, following the closing, all of the stockholders and warrant holders of Ascend and the shareholders of ePAK will be the security holders of ePAK International.
ePAK is currently owned by members of ePAK's senior management and institutional investors including venture capital and private equity firms led by Walden International. Commenting on the acquisition, Mr. Lip-Bu Tan, Chairman of Walden International, said, "We are excited about the proposed acquisition and the contribution it will make to ePAK's next phase of growth. This reinforces our belief that ePAK's management team will continue to deliver strong results in the future."
Ascend has received an opinion from Capitalink, a division of Ladenburg Thalmann, that the consideration being given by Ascend in the acquisition is fair, from a financial point of view, to Ascend's stockholders and that the fair market value of ePAK is at least equal to 80% of the net assets of Ascend. The transaction is subject to Ascend receiving stockholder approval of the transaction and customary and other closing conditions set forth in the agreement.
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