News

15 January 2010

 

Advanced Photonix amends Michigan facility lease, saving $1.6m

Advanced Photonix Inc (API) says that its subsidiary Picometrix LLC has entered into a ‘Fourth Addendum & Extension Agreement’ for the lease of its facility in Ann Arbor, MI, USA.

The 50,000 square foot facility houses research, development and manufacturing for its terahertz and high-speed optical receiver (HSOR) product platforms, API's corporate headquarters, and the semiconductor microfabrication facility for all three of Advanced Photonix’s product platforms (optoelectronic solutions, HSORs and terahertz instrumentation). The facility was completed in 2001 and was designed to meet the unique requirements of its ultra-fast optoelectronic product platforms, including indium phosphide and gallium arsenide material growth, semiconductor microfabrication, and precision hybrid assembly and high-speed test. In addition, the plant includes an HSOR laboratory and three secure user laboratories for collaborative terahertz application development.

In 2001, the firm entered into a 10-year lease with two 5-year options to renew at a lease rate tied to the CPI (consumer price index), with a minimum increase for each 5-year option. The original lease included the first right of refusal to purchase the facility and was scheduled to expire on 31 May 2011. The firm has now amended the lease terms and extended the lease to 31 May 2021. The new lease represents a 19% reduction in lease payments over the new term (about $1.6m in savings). It has also retained the right of first refusal to purchase the property during the new lease term. In addition, it has negotiated an option to purchase the facility on 31 May 2016 for no less than $7.1m.

“This represents a significant cost savings for the company in these challenging economic times, preserves our substantial investments in this unique facility, and ensures our ability to make future investments to support our long-term growth objectives without the expense and disruption of relocating to another facility,” says API’s chief financial officer Rob Risser. “We expect the savings to begin to be reflected in our results in the first quarter of 2010.”

See related item:

Advanced Photonix maintains gross margin despite slump

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