Cirtek Holdings Philippines Corp. (CHPC) has agreed to sell its semiconductor assembly and testing unit to India's Sancode Semi Private Ltd. for $20.2 million (P1.29 billion), a move the Philippine listed technology company said is aimed at reducing debt and funding its remaining operating business.

"This transaction represents an important milestone in CHPC's continuing effort to unlock value from its investments while strengthening our financial position," Cirtek Executive Vice-President and Chief Financial Officer Brian Gregory Liu said in a stock exchange filing on Monday.

The company's board approved the sale of all 155.51 million shares in Cirtek Electronics Corp. (CEC), representing 100% of the unit's outstanding capital stock, to Sancode. Assembly and testing is the back-end stage of chip production, where finished devices are packaged and tested before shipment — the portion of the semiconductor chain now moving to an Indian owner.

Under the payment structure, Sancode will pay $11.32 million at closing for roughly 60% of the shares, with the remaining $8.88 million due within one year. Cirtek said the shares covered by the second tranche will be placed in escrow until full payment is completed, meaning ownership of the deferred shares changes hands only once the buyer has paid in full. The transaction remains subject to customary closing conditions.

Cirtek plans to use part of the proceeds to repay bank loans and allocate the balance to the working capital requirements of Cirtek Advanced Technologies and Solutions, Inc. (CATSI), its remaining core operating unit — an outcome that would leave the listed group centered on a single operating platform with less bank debt on its books.

Separately, Sancode plans to invest an additional $2 million in capital expenditures to upgrade CEC's equipment and expand capacity. The Indian company also to set aside $2.8 million for an employee benefit program aimed at retaining CEC's workforce, keeping the existing team in place as the new owner adds capacity.

"The expected infusion of working capital will strengthen our ability to support ongoing operations, pursue growth initiatives and better serve our customers," CATSI President Mark Wong said. "With a stronger financial foundation, CATSI will be in a better position to improve operational efficiency and capitalize on emerging market opportunities."

Cirtek operates through CATSI, which provides design, engineering, manufacturing, testing and supply chain services for electronic equipment, specializing in radio frequency, microwave and millimeter-wave technologies.

The markers to watch from here are the satisfaction of the closing conditions, the $11.32 million payment at closing, and the release of the escrowed shares once the $8.88 million balance is settled within the one-year window, after which proceeds are slated to go toward loan repayments and CATSI's working capital.

Cirtek shares rose 24.17% to P1.49 each. — Alexandria Grace C. Magno