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Austria’s AMS aims for domination agreement with Osram

VIENNA (Reuters) – Austrian sensor specialist AMS <AMS.S> <AMS.VI> made clear on Monday that it aims to secure a so-called domination agreement with Osram <OSRn.DE> to allow it to use the lighting group’s cash flow to pay back debt.

AMS, best known for supplying Apple’s <AAPL.O> iPhones with facial recognition technology, wants to form a global player in sensors and lights with its takeover of the leading manufacturer of car headlamps.

Having secured nearly 60% of Osram’s shares in December, taking on debt of 4.4 billion euros ($4.8 billion) to finance the deal, AMS gained shareholder approval for a 1.7 billion euro capital increase to help to fund the acquisition of the much bigger German group.

A domination and profit and loss transfer agreement (DPLTA) would give AMS full say over Osram’s finances and allow it to consolidate the company’s cash flow.

To clinch the agreement AMS Chief Executive Alexander Everke needs approval from 75% of Osram investors at an extraordinary shareholder meeting.

“We intend to implement a DPLTA to enable both companies to work together and realize our joint strategic vision of creating a global leader in sensor solutions and photonics in an efficient manner,” AMS Chief Executive Alexander Everke said in a statement on Monday.

Until now AMS has told investors there might be a way to pay back debt and achieve targeted integration benefits of 300 million euros ($327 million), though analysts have been skeptical.

The Austrian company would have to offer the remaining minority investors two alternatives: either pay them an annual guaranteed dividend or a cash settlement.

AMS reports fourth-quarter earnings on Tuesday.

(Editing by David Goodman)