Undervalued ACLS Completes Sale of SEN Interest to SHI

Mar.31.09 | About: Axcelis Technologies, (ACLS)

Axcelis Technologies Inc (Nasdaq: ACLS) has completed the sale of its 50% interest in SEN Corporation, its joint venture with Sumitomo Heavy Industries, Ltd. (SHI) to SHI for proceeds of $122.3 million. ACLS received around $35.9M in cash after applying $86.4M of the proceeds to meet obligations to the holders of the company’s 4.25% Convertible Senior Subordinated Notes, upon which ACLS defaulted in January.

We started following ACLS on January 8 this year because it is an undervalued asset play with an activist investor, Sterling Capital Management, holding 10.7% of its outstanding stock. In our initial post we estimated ACLS’s liquidating value at around $134.9M, or $1.31 per share. We’ve now updated our estimate following completion of the sale to $147M or $1.43 per share, which is more than 250% higher than its close yesterday of $0.41.

Streetinsider.com has the article:

Axcelis Technologies, Inc. (Nasdaq: ACLS) has completed the sale of its 50% interest in SEN Corporation, an SHI and Axcelis Company (SEN), to Sumitomo Heavy Industries, Ltd. (SHI). The Company received net proceeds from the sale of approximately $122.3 million after advisor fees and other expenses and will recognize a gain on the sale of approximately $1.2 million in the first quarter of 2009.

Axcelis has applied $86.4 million of the sale proceeds to meet its obligations on its 4.25% Convertible Senior Subordinated Notes, which were due in January. As a result of the payment, the trustee for the notes will withdraw litigation filed in connection with Axcelis’ default on the notes.

The sale was completed pursuant to a Share Purchase Agreement that Axcelis and SHI entered into on February 26, 2009. SEN was licensed by Axcelis to manufacture and sell certain implant products in Japan. Prior to the completion of the sale, it was owned 50/50 by Axcelis and SHI.

Hat tip to manny.

Full Disclosure: We have a holding in ACLS