Asia Pacific Wire & Cable to sell stake in Shandong Pacific Fiber-Optic joint venture

Asia Pacific Wire & Cable Corp. Ltd. (NASDAQ: APWC) has reached an agreement to sell its 51% interest in the Shandong Pacific Fiber Optic Co., Ltd. (SPFO) joint venture to a group of investors. The deal, worth RMB 18.5 million (approximately $2.9 million) is subject to the satisfactory completion of due diligence by the buyers and the procurement of certain local governmental approvals, both of which APWC currently anticipates will be completed within approximately 30 to 60 days.

APWC also will be released from all of its obligations with regard to the SPFO joint venture, including the SPFO leasehold obligations.

The company says the divesture of SPFO is an important goal of its board of directors and management to enable the AWPC to focus on its more profitable core wire and cable businesses. In fact, while SPFO has been one of the larger manufacturers of fiber optic cable in Shandong Province, APWC believes that an oversupply of fiber-optic cable products limits the opportunities for sustained development of what is a non-core product line.

AWPC listed other reasons for abandoning the fiber optic cable business. For example, it says the fiber-optic cable sector throughout China has been dominated by a few large players who in aggregate account for more than 80% of sales of fiber-optic cable products. SPFO faces additional challenges, such as obtaining raw materials like optical fiber at prices that are competitive in the marketplace, according to AWPC. Moreover, the Chinese government is encouraging further consolidation of fiber and cable manufacturers, APWC adds.