CFIUS Allowing Magnachip to Refile; Commercial Space Company Discloses NSA Details

The Committee on Foreign Investment in the U.S. granted a request from Magnachip Semiconductor Corp. and Wise Road Capital to withdraw and resubmit their initial CFIUS filing, Magnachip said in a Sept. 14 filing with the Securities and Exchange Commission. This will allow the two companies more time for “further discussion” with CFIUS about potential pathways to mitigate the national security risks CFIUS had identified in the merger. CFIUS’s new review period for the merger began Sept. 14 and will conclude no later than Oct. 28, the committee told Magnachip in a Sept. 13 letter. CFIUS may extend the review period if warranted.

The CFIUS decision came less than a month after the committee said it planned to refer the merger to President Joe Biden because it couldn’t identify measures to mitigate the deal’s national security risks (see 2108310008). The heavily scrutinized deal between South Korea-based Magnachip and Beijing-based Wise Road Capital represents almost exactly the type of investment transaction that CFIUS is most interested in reviewing, mostly because it involves sensitive semiconductor technology and China (see 2109010051).

In a separate case, a U.S. commercial space company recently disclosed the details of its national security agreement with CFIUS, detailing the requirements and conditions it must meet to comply with CFIUS approval of its transaction with Stable Road Acquisition (see 2107060028). The company, Momentus, which agreed to the NSA in June, must hire and pay for a full-time “security officer,” who will report to CFIUS and oversee compliance with the NSA, according to a Sept. 15 SEC filing.

Momentus also will hire and pay an independent third-party monitor and auditor to also monitor their compliance with the NSA, the filing said. The company also must create a plan to “safeguard protected technical information, systems and facilities” and will be subject to a host of other conditions under the deal. “We will incur substantial costs to implement these and other requirements under the NSA,” Momentus said, “and we expect that substantial personnel time will need to be devoted to implement and comply with these requirements.” If it violates the NSA, the company said it could face fines of up to $100,000 per day or $1 million “per breach.”