Axt Inc 8-K, filed Dec 31, 2020
Axt Inc (AXTI)
About this 8-K
Axt Inc filed this 8-K on December 31, 2020, reporting on events of December 25, 2020.
Items reported
- Item 1.01: Entered into a material agreement
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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CURRENT REPORT
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References to “AXT” refer to AXT, Inc. and references to “Tongmei” refer to Beijing Tongmei Xtal Technology Co., Ltd. For purposes of this Current Report on Form 8-K, amounts in Renminbi, or RMB, have been translated into approximate amounts in U.S. dollars solely for the convenience of the reader.
Item 1.01 Entry into a Material Definitive Agreement.
On December 25, 2020, AXT and Tongmei entered into two sets of definitive transaction documents, each consisting of a capital increase agreement in substantially the same form (collectively, the “Capital Increase Agreements”), a supplemental agreement in substantially the same form (collectively, the “First Supplemental Agreements”) and a second supplemental agreement in substantially the same form (collectively, the “Second Supplemental Agreements” and together with the Capital Increase Agreements and First Supplemental Agreements, the “Transaction Documents”), with several private equity investors in China (each, an “Investor” and collectively, the “Investors”). The Investors are Fujian Province An Xin Industry Investment Fund Partnership (L.P.), Jinggangshan Meicheng Equity Investment Partnership (L.P.), Hefei Walden II IC Industry Investment Partnership (L.P.), Qingdao Xinxingyi Equity Investment Fund Partnership (L.P.), Qiji (Hangzhou) Investment Consulting Co. Ltd., Sunrise Baoying (Ningbo) Investment Center (LP) and Gongqingcheng Yi Hua Tong Ze Investment Partnership (L.P.).
Capital Increase Agreements
In exchange for an approximately 3.723% minority interest in Tongmei, the Investors invested approximately $25 million into Tongmei pursuant to the Transaction Documents. The investment is the second tranche of private equity investment in Tongmei. In the first tranche of private equity investment in Tongmei, Liaoning Haitong New Energy Low-Carbon Industry Equity Investment Fund Co., Ltd., Liaoning Haitong New Kinetic Energy Equity Investment Fund Partnership (Limited Partnership) and Haitong Innovation Securities Investment Co., Ltd. invested approximately $22.5 million, which represents an approximately 3.351% minority interest in Tongmei following the completion of the second tranche investment.
Under the Capital Increase Agreements, each Investor has agreed to pay to Tongmei a specified RMB amount to acquire equity interests of Tongmei (the “Placement Shares”). The second tranche investment was funded on December 28, 2020. Pursuant to the Capital Increase Agreements, in the event of any hostile takeover or any attempted change in control of AXT, AXT’s board of directors shall, subject to the directors’ fiduciary duties, take defensive measures to avoid material changes to AXT’s capitalization, board of directors or management.
First Supplemental Agreements and Second Supplemental Agreements
Under the First Supplemental Agreements, Tongmei has agreed to use best efforts to complete certain restructuring steps by March 31, 2021 to facilitate the proposed listing of Tongmei’s shares on a stock exchange in the People’s Republic of China (the “Listing”). Under the First Supplemental Agreements and Second Supplemental Agreements, if the Listing has not been completed and the China Securities Regulatory Commission has not otherwise approved Tongmei’s Listing application by December 31, 2022, then each Investor will have the right to require AXT to repurchase such Investor’s Placement Shares at a price equal to the initial purchase price paid by such Investor, without interest. The investment is an “at-risk” investment and is not collateralized or supported by third party guarantees.
Pursuant to the terms of the First Supplemental Agreements, if the Listing is completed, then each Investor will be prohibited from selling or otherwise transferring its Placement Shares for a period of one year from the listing date. In addition, under the First Supplemental Agreements, each Investor is entitled to, among other rights, a right of first refusal and co-sale right with respect to AXT’s transfer of shares of Tongmei prior to the Listing. Each Investor is also entitled to broad-based weighted average anti-dilution protection with respect to the Placement Shares prior to the Listing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | AXT, INC. | |
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| By: | /s/ Gary L. Fischer | |
| | Gary L. Fischer Chief Financial Officer and Corporate Secretary | |
Date: December 31, 2020