[slide 1]
CFIUS Pre-Filing Consultation Briefing
Pre-filing consultation with U.S. Department of the Treasury, Office of Investment Security
Meeting date: June 19, 2023
Acquiror: Halcyon Semiconductor AG (HSAG)
Target: Marlowe Asset Management Photonics Inc. (VPI)
Presented by Calderwood & Harkness LLP, counsel to HSAG
[slide 2]
Meeting Objectives
Introduce the parties and the proposed transaction
Explain why the parties view this as a mandatory filing
Preview HSAG's mitigation framework
Identify areas where Treasury guidance would help shape the notice
Confirm timeline expectations
[slide 3]
Transaction Snapshot
100% equity acquisition of VPI by Halcyon US Holdings Inc.
Purchase price: $1.42 billion (cash-free, debt-free)
Maximum aggregate consideration $1.505 billion (incl. $85M earnout)
100% cash consideration; no HSAG shares issued
SPA executed June 10, 2023; closing conditional on CFIUS clearance
[slide 4]
Acquiror Profile — Halcyon Semiconductor AG
German Aktiengesellschaft; HQ Dresden, Saxony (Industriestraße 44)
Listed on Frankfurt Stock Exchange (XETRA: HLC); LEI 5299007KXQ2M4GHILZ38
Market cap ~€14.8B (June 1, 2023); FY2022 revenue €6.12B; EBITDA €1.37B
German commercial register HRB 28416 (Amtsgericht Dresden)
No German government ownership or control
[slide 5]
HSAG Leadership
CEO: Dr. Maximilian Ehrhardt (materials physicist; 18 years at HSAG)
CFO: Katarina Brückner (Wirtschaftsprüfer)
General Counsel: Stefan Lohse (LL.M. Georgetown; NY bar; German/US dual citizen)
German counsel: Schilling Frey Rechtsanwälte (Prof. Dr. Ulrich Schilling)
Vorstand and Aufsichtsrat composition available on request
[slide 6]
HSAG U.S. Footprint (Pre-Closing)
Halcyon US Inc. — fabless design center, Austin, TX (~320 employees)
11501 Alterra Parkway, Suite 300, Austin, TX 78758
No classified work; no ITAR-registered activity in Austin
Halcyon US Holdings Inc. — new Delaware acquisition vehicle (formed June 5, 2023)
Registered office: 160 Greentree Drive, Suite 101, Dover, DE 19904
[slide 7]
Target Profile — Marlowe Asset Management Photonics Inc. (VPI)
Delaware C-corp (incorporated Feb 14, 2009); HQ Colorado Springs, CO
GaN-on-SiC power amplifier chips for defense radar, satcom, 5G infrastructure
GaN fab: 9200 Innovation Boulevard, Albuquerque, NM (45,000 sq. ft.)
FY2022 revenue $287.4M; EBITDA $61.2M
486 employees; 212 with active U.S. government clearances
[slide 8]
VPI Leadership
Founder/CEO: Dr. Nathan Trevorrow (former DARPA program manager; TS/SCI)
President/COO: Marissa Sung-Avila (former U.S. Army signal corps; SECRET)
CFO: Derek Wainsborough
VP Government Programs / FSO: Col. (Ret.) Bryce Hendrickson, USAF (TS/SCI)
Independent director: Adrienne Delacroix (SECRET)
[slide 9]
VPI Ownership (Pre-Closing)
Dr. Nathan Trevorrow & family trusts — 22.4%
Ridgecrest Ventures Fund III, L.P. — 31.7% (Franklin Yee, board designee)
Cascadian Capital Partners Growth Fund II, L.P. — 24.3% (Olivia Hartmann, board designee)
Marissa Sung-Avila — 4.1%; angels — 5.7%
Employee option pool — 11.8%
[slide 10]
Post-Closing Corporate Structure
HSAG (Germany) → Halcyon US Holdings Inc. (Delaware) → VPI (Delaware)
Halcyon US Inc. (Austin) remains sister company, no operational integration with VPI
VPI to be maintained as a stand-alone U.S. subsidiary
No merger of VPI into any HSAG entity contemplated
VPI board to be reconstituted per proposed mitigation
[slide 11]
VPI Government Contracts
14 active DoD contracts (prime + sub); aggregate backlog $193M
U.S. Army CERDEC — GaN HEMT modules for AN/TPS-80 radar ($52.3M)
AFRL — Next-gen mmWave power amplifiers ($41.7M)
MDA — GaN T/R modules for missile defense ($38.9M)
Subcontract to Ironclad Defense Systems (NAVSEA prime) $34.1M; DHS S&T $26.0M
[slide 12]
Export-Controlled Products & Registrations
ITAR Category XI(a)(3) defense articles
EAR ECCNs 3A001, 3A991, 3E001 (dual-use)
DDTC registration since 2011; Registration No. M-24817
3 active DSP-5 licenses (UK, Australia deliveries)
Facility Clearance: SECRET; CAGE Code 7VK92
[slide 13]
Intellectual Property Overview
47 granted U.S. patents; 12 pending applications
Key patent families: GaN-on-SiC epitaxial growth; HEMT gate structure; mmWave matching networks
23 of 47 patents government-funded — subject to march-in rights (35 U.S.C. §203; DFARS 252.227-7038)
31 registered internal trade secrets (GaN recipes, reliability screens)
iEdison reporting current
[slide 14]
Basis for Filing
Covered transaction under 31 C.F.R. §800.213
VPI is a TID U.S. business — critical technology (GaN semiconductors)
Mandatory declaration trigger under §800.401 (critical technology)
Parties electing full voluntary joint notice under §800.501, not short-form
Rationale: complexity of classified programs; anticipated mitigation
[slide 15]
Financing Structure
$900M senior secured term loan (5-yr; SOFR + 275 bps; 1% amort)
Admin agent: Meridian National Bank; co-leads Atlas Commercial Lending AG and Pacific Basin Credit Corp.
$520M HSAG equity contribution (balance sheet cash + €300M revolver draw)
Revolver lender: Rheinische Handelsbank AG
No foreign government financing sources
[slide 16]
Advisor Team
Buyer's counsel: Calderwood & Harkness LLP (M&A, CFIUS, IP)
Buyer's German counsel: Schilling Frey Rechtsanwälte
Seller's counsel: Wethersfield & Gale LLP
Financial advisors: Ashgrove Capital Group (HSAG); Ridgeway Bancorp LLC (VPI)
R&W insurer: Graystone Specialty Insurance; escrow: Pinnacle Trust Company, N.A.
[slide 17]
Identified National Security Considerations
Foreign access to classified defense programs
Transfer of ITAR/EAR-controlled technology to non-U.S. persons
Cybersecurity integration risks
Continuity of DoD supply chain (radar, missile defense, satcom)
Retention of cleared personnel and FSO
[slide 18]
Proposed Mitigation Framework
Reconstituted VPI board with majority U.S.-cleared Security Board Members and Government Security Committee
Technology Control Plan restricting transfer to non-U.S. persons
Physical/logical IT segregation from HSAG global network
Facility access restrictions (Albuquerque clean room sections C-7 through C-12)
Third-party compliance monitor; annual audits; 72-hour incident reporting
[slide 19]
HSAG Global Operations — China Disclosure
Halcyon Semiconductor (Shanghai) Co., Ltd. — consumer-grade power management ICs only
China revenue ~$81.4M (~1.3% of HSAG total)
No GaN, defense, or dual-use activities in China
No Chinese government ownership or influence in HSAG
Willing to accept NSA provisions on China-related information walls
[slide 20]
Cybersecurity Posture
HSAG maintains ISO 27001 certification enterprise-wide
VPI to maintain NIST SP 800-171 compliance independently
No shared cloud infrastructure between HSAG and VPI
Annual third-party penetration testing at VPI
72-hour incident reporting to DCSA under proposed NSA
[slide 21]
Proposed Timeline
Pre-filing consultation: June 19, 2023 (today)
Voluntary joint notice filing target: mid-July 2023
45-day review; potential 45-day investigation
NSA negotiation in parallel with investigation phase
Target closing: Q1 2024, subject to clearance
[slide 22]
Areas Where Treasury Guidance Would Be Helpful
Preferred structure and level of detail for classified program disclosures
Expectations regarding co-lead agency engagement (DoD, DOE)
Anticipated scope of RFIs given HSAG's China footprint
Preferred approach to third-party monitor selection
Any other early flags Treasury wishes to raise