Summary
This 8-K filing from Corning Incorporated (GLW) on December 29, 2015, details an Assignment Agreement primarily concerning financial obligations related to the prior acquisition of Samsung Display Co., Ltd.'s ("SDC") interests in Samsung Corning Precision Materials Co., Ltd. ("SCP"), which was subsequently renamed Corning Precision Materials Co., Ltd. ("CPM"). The agreement effectively reallocates potential future payments between Corning Buyer and CPM, which is now owned by Corning. Specifically, it modifies the terms of previous "Commercial Projection Indemnities" and "Volume Price Indemnity" that were part of a Framework Agreement dated October 22, 2013. For investors, the key takeaway is the restructuring of contingent liabilities and potential payments stemming from the 2013 acquisition. The Assignment Agreement aims to clarify and settle specific financial responsibilities concerning revenue and volume-based payments originally owed between SDC and Corning Buyer. This move appears to streamline the financial obligations associated with the divested business, potentially reducing uncertainty for Corning's future financial reporting and cash flows related to this historical transaction.
Key Highlights
- 1Corning Incorporated entered into an Assignment Agreement on December 29, 2015, modifying terms of a prior 2013 Framework Agreement.
- 2The agreement primarily addresses the allocation of potential future payments between Corning Buyer and Corning Precision Materials Co., Ltd. (formerly SCP).
- 3It reallocates obligations related to 'Commercial Projection Indemnities' and 'Volume Price Indemnity' which were contingent on the performance of the former SCP business.
- 4SDC's obligation to pay Corning Buyer more than $300 million under the Commercial Projection Indemnities is assigned to CPM.
- 5SDC's right to receive any amount over $300 million under the Commercial Projection Indemnities is also assigned to CPM.
- 6All rights for SDC to receive payment under the Volume Price Indemnity are assigned to CPM, meaning Corning Buyer will pay CPM directly for this indemnity.
- 7The agreement clarifies that any liabilities under the Commercial Projection Indemnities less than or equal to $300 million will remain between Corning Buyer and SDC.