Shareholder Vote on Brillian-Syntax Merger Expected in Nov.
The proposed merger of Brillian and Syntax shelved Syntax IPO plans and broadened the firms’ strategies for competing in the TV market, according to documents filed with the SEC. In the spring, as Brillian was weighing financing options with investment banking firms, Syntax was starting preliminary work on an IPO. C.E. Unterberg Towbin, which was working with both firms, pulled them together. Discussions began in May, Brillian said. A definitive merger agreement was reached July 12.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
SEC review of the proposed merger should be completed in 4-6 weeks, perhaps meaning a Nov. shareholder vote, Brillian CEO Vincent Sollitto said. The combined company would have 220 employees with offices in City of Industry, Cal., where Syntax also has an LCD TV assembly facility, and Tempe, Ariz. Sollitto and Syntax CEO James Li will be chmn.-CEO and pres.-COO, respectively, under 2-year contracts paying them annual salaries of $275,000 and $240,000. Brillian CFO Wayne Pratt will have the same responsibilities in the merged company, while Syntax CFO Thomas Chow will shift to chief procurement officer. The new company will have a 10-member board, 1/2 of which will be independent directors, SEC documents said. The agreement can be terminated if the merger isn’t completed by Nov. 30, and it carries a $3.5 million breakup fee.
Syntax will continue to draw from a wide assortment of LCD panel suppliers, including LG.Philips, AU Optronics and Samsung, Sollitto said. Taiwan’s Kolin will continue to assemble Syntax brand LCD TVs and have a 7% stake in the combined company, down from the 10% it held in Syntax, said Sollitto, who travels Sat. to Taiwan to meet with Kolin. Brillian OEM supplier Suntron, which builds the firm’s LCoS-based rear projection TVs at its plant in Tijuana, Mexico, likely will produce Syntax models, Sollitto said. Syntax, which fielded a 50W rear projection TV based on JVC’s D-ILA microdisplay, has sold about 8,000 since introducing the set in late 2003, Sollitto said.
Syntax swung to a $365,000 profit during the 9-month period ended March 31 from a $1.3 million net loss a year earlier, as revenues rose to $59.7 million from $19.2 million, according to SEC documents. Syntax sales, distribution marketing expenses rose to $1.9 million from $554,000 a year earlier, while general & administrative costs jumped to $4.8 million from $1.3 million. It had $436,000 in cash and equivalents March 31. In the fiscal year ended June 30, 2004, Syntax’s loss widened to $604,000 from $235,000 a year earlier as revenue rose to $30.6 million from $2.4 million. Brillian reported its 2nd-quarter loss grew to $7.2 million from $4.8 million, as revenue fell to $1 million from $1.13 million. SEOS Ltd. and Rockwell Collins each accounted for 27% of Brillian’s revenue during the quarter, largely for near-to-eye microdisplays. Sales to I/O Systems represented 12% of revenue, down from 20% a year earlier.
* * * * *
Brillian’s printed circuit board supplier Three-Five Electronic Manufacturing Services is expected to file for bankruptcy protection in U.S. Bankruptcy Court, Tempe, Ariz., this week. The filing is part of a planned sale of the Redmond, Wash.-based company -- a subsidiary of Three- Five Systems -- to Catalyst Manufacturing Services in a deal valued at $6.6 million. The sale is to consist of $3.6 million cash with Catalyst also assuming “certain liabilities,” according to an SEC filing. Three-Five Systems, which spun off Brillian in Sept. 2003, has moved in recent months to sell off some businesses. Video Display Corp. bought Three-Five’s Innovative Display Systems Div. this year (CED May 11 p8). The firm also is seeking a buyer for its RF module assembly business. Catalyst is a high-volume manufacturer of printed circuit boards with 85,000-sq.-ft. and 40,000-sq.-ft. factories in Research Triangle, N.C., and Endicott, N.Y., respectively. Three-Five earlier this year moved its hq to Redmond, leaving a handful of employees in Tempe, company officials said. Brillian hasn’t experienced any “supply issues” as a result of Three-Five Electronic Manufacturing’s planned bankruptcy filing, and the planned merger with Syntax would provide the company access to additional vendors, Sollitto said. Brillian subleases 55,780 sq. ft. at Three-Five’s former Tempe hq, paying $61,952 monthly rent. Three-Five Electronic Manufacturing was formed after Three-Five’s Dec. 2002 acquisition of ETMA Corp.