LightPath's Western Pivot
LightPath Technologies Sells China Subsidiary for $4.5 Million, Completing Western Alignment
Anonymous
Key Points
1
Purchase price of $4.5 million is payable in installments over up to five years, with a minimum annual payment of at least $500,000, a 4% financing interest on installments, and 7% damages on overdue amounts.
2
During the five-year repayment period, the buyer will supply LightPath at cost-plus pricing with an escalating structure: starting at cost plus 10%, increasing by 5 percentage points for every $1 million repaid, up to a maximum of cost plus 30% when fully paid.
3
The China unit generated roughly $4.5 million in annual third-party revenue in fiscal 2025 and 2026, and that revenue will be deconsolidated from LightPath after the transaction, while the buyer remains LightPath’s exclusive supplier for five years at cost-plus pricing.
4
The agreement imposes post-closing restrictions on the buyer, including limits on changes of control, asset transfers, and ownership changes during the repayment period.
LightPath Technologies has agreed to sell its Chinese manufacturing subsidiary for $4.5 million, cutting all ties with China and completing a multi-year push toward Western-aligned production, according to Nasdaq. The buyer is Hengtu Optical Technology, a management-led group, which will pay in installments over five years.
The deal removes roughly $4.5 million in annual China revenue from LightPath's books, Gurufocus reported. But the company will keep its supply chain intact — Hengtu must continue shipping parts to LightPath's U.S. and European customers under a five-year exclusive supply deal.
How the $4.5 Million Payment Deal Works
LightPath will collect the $4.5 million in pieces, not all at once. Hengtu must pay at least $500,000 per year. The deal charges 4% interest on installments and a steeper 7% penalty on any late payments, according to TipRanks.
LightPath also retains board observer rights at the China unit during the repayment window. The agreement blocks Hengtu from making major ownership changes, selling key assets, or changing control of the business until the full $4.5 million is paid, TradingView reported.
Hengtu Must Keep Supplying LightPath at Cost-Plus Prices
Even after the sale closes, Hengtu will act as LightPath's exclusive supplier for five years. The pricing starts at cost plus 10%. It rises by 5 percentage points for every $1 million Hengtu repays, topping out at cost plus 30% when fully paid, according to Nasdaq.
That structure gives Hengtu a financial incentive to repay faster — lower markups early on keep its margins tighter. For LightPath, it locks in a stable, low-cost supply source while the company builds out its Western manufacturing base, TipRanks noted.
LightPath Positions Itself as a Defense-Ready Optics Supplier
The China unit brought in roughly $4.5 million in outside revenue in both fiscal 2025 and 2026. That revenue will no longer appear on LightPath's financial statements once the deal closes, Gurufocus reported. The company expects closing in the coming weeks.
Industry coverage frames the move as a strategic play for defense contracts. Without China operations, LightPath can claim full NDAA compliance — a federal rule that limits Chinese-made components in U.S. government purchases. Citybiz described the deal as completing LightPath's shift to a "fully Western-aligned" manufacturing footprint.
LightPath Keeps Its Trademarks and Technology in China
LightPath will license its brand name and technology to Hengtu after the sale. That means Hengtu can keep running the Zhenjiang factory under familiar terms while still serving as LightPath's parts supplier, TradingView reported.
The licensing deal, combined with the supply agreement, gives LightPath continued influence over how the China facility operates — even though it will no longer own it. The setup lets both sides keep doing business together without LightPath carrying China exposure on its balance sheet.
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