Rubicon prices $91 million public offering

17 Jun 2010

Additional funds aid capacity expansion required to meet rampant demand for high-brightness white LEDs.

Rubicon Technology, the manufacturer of sapphire substrates critical to white LED production, will raise up to $91 million through a public offering.

The Illinois-based company had already announced its intentions with the filing of an S-3 form at the Securities & Exchange Commission, and has now priced the offering at $30 per share. Including an overallotment option, Rubicon stands to generate gross proceeds of $90.8 million.

Rubicon is currently in the middle of a significant capacity expansion, as demand for GaN-based LEDs used in TV backlight and general lighting applications gathers momentum.

The company specializes in producing large-scale sapphire wafers greater than four inches in diameter. While much of the LED industry fabricates the light-emitting chips on a two-inch platform, many of the top-tier players, such as Osram OS and Samsung, have migrated to the larger format.

As one of the only suppliers capable of producing high-quality sapphire in the larger size, Rubicon is able to benefit from improved profit margins. In recent months, the supply of sapphire material has tightened, and Rubicon noted a strong increase in sapphire selling prices in its most recent earnings call. There is now expected to be an industry shortage in the second half of 2010, pushing prices up further.

Extending crystal production capacities takes time, and Rubicon’s own expansion is not expected to be fully operational until well into 2011. The funds raised in the latest public offering will likely pay for a significant part of that expansion.