Carlyle, Unison Said to Plan Sale of Japan’s Covalent

Carlyle Group LP and Japanese private-equity firm Unison Capital Inc. plan to sell semiconductor-parts maker Covalent Materials Corp., two people with knowledge of the matter said.

The two firms are preparing an auction for the proposed sale of Tokyo-based Covalent, formerly known as Toshiba Ceramics Co., and are seeking to sell it for about 50 billion yen ($489 million), said one of the people, who asked not to be named because the information is private. The companies aim to complete the sale by the end of this year, the people said.

Carlyle and Unison acquired Toshiba Ceramics in 2006 in a management buyout, delisted it from the Tokyo Stock Exchange and renamed it Covalent. The two private-equity firms restructured the chip-material maker after a drop in semiconductor prices.

Spokesmen for Carlyle Japan and Unison declined to comment. Calls to Covalent were diverted to an answering machine saying the company is closed for business from April 29 to May 6. Many Japanese businesses are closed this week during the nation’s “Golden Week” holiday season.

Covalent makes materials and parts necessary for production of semiconductors, such as quartz glass, silicon carbide products and ceramics, according to its website. It also makes medical products such as artificial bone filler.

The company completed the sale of its silicon wafer business in March 2012 to Taiwan’s Sino-American Silicon Products Inc., as part of its efforts to withdraw from some businesses and focus on ceramics production for semiconductors, it said in a statement on March 29 that year.

Bond Buyback

Covalent clinched a deal with its bondholders in October 2012 to buy back some of the securities and extend their maturity, after finding it was unable to repay about 53 billion yen in bonds, according to the company.

Its net income rose 12 percent to 1.64 billion yen in the six months ended Sept. 30 from a year earlier, partly due to sales of businesses and assets, according to financial results posted in December.

Carlyle and Unison hold a combined stake of about 94 percent in Covalent, and Toshiba Corp. holds about 3 percent, according to a company financial report.

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