KUALA LUMPUR (March 6): Globetronics Technology Bhd has secured a contract worth US$7.59 million (RM35.90 million) to provide technical services related to outsourced semiconductor assembly and testing.

In a filing with Bursa Malaysia on Wednesday, Globetronics announced that its wholly owned subsidiary ISO Technology Sdn Bhd had entered into a technology provision agreement with Kaynes Semicon Private Ltd.

ISO Tech principally would provide services related to package development, training areas, and provision of target customer segments to Kaynes Semicon, a wholly owned subsidiary of India-listed Kaynes Technology India Ltd.

Of the total contract award of US$7.59 million, ISO Technology will reinvest US$5.28 million (net of taxes) back into the securities of Kaynes Semicon.  

The reinvestment will take the form of Series A and Series B compulsorily convertible non-cumulative non-participating preference shares (CCPS) in Kaynes Semicon, divided into two tranches.

Under the reinvestment plan, Kaynes Semicon's parent company is obligated to provide an exit strategy for ISO Technology either through an initial public offering, or a strategic sale within three years of ISO Technology's CCPS subscription at a minimum price of the US$5.28 million initial investment amount.

According to Globetronics, the reinvestment was arrived at on a 'willing buyer and willing seller' basis, taking into account the agreed consideration from Kaynes Semicon.

"The proposed subscription will provide a good opportunity for the company to expand its customer base into India, and to strengthen its market presence in the automotive and industrial segments,” Globetronics added.

Globetronics shares finished four sen or 2.76% lower at RM1.41 on Wednesday, giving the group a market capitalisation of RM951.76 million.