Mosel Vitelic Inc (茂矽), a partner in the nation's second-largest memory-chip maker ProMOS Technologies Inc (茂德科技), said it failed to pay part of a NT$1.6 billion (US$46.3 million) bond, its second debt default in two months.
Mosel failed to settle the bond due last Friday, vice president Thomas Chang (
The company last month deferred settlement of a NT$4.7 billion bond after missing payment in April.
"We paid about 30 percent of the latest debt to small bondholders last week," Chang said.
Mosel will ask creditors to reschedule payment of the rest of the money in installments during a period of about 12 months, he said.
Mosel pledged a 25 percent stake in ProMOS Technologies, a venture with Infineon Technologies AG, as security for the earlier debt.
Mosel did not offer any collateral for the NT$1.6 billion bond convertible into its shares, avoiding increasing the risk that it would lose control of ProMOS, some investors said, adding the company's priority is to pay the earlier bond.
"The latest default isn't so important for us," said Frank Kuo, who counts Mosel debt among the equivalent of US$3.4 billion he helps manage for Fubon Securities Investment Trust (
Munich-based Infineon, the world's fourth-largest chipmaker, has fought with Mosel for control of ProMOS. In January, Infineon said it would exit the venture after ProMOS shareholders removed two Infineon members from the ProMOS board, hours after they were elected.
Mosel shares have been suspended from trading since May 9 after falling by the 7 percent daily limit for 16 consecutive trading sessions. Based on its last traded price of NT$1.49, Mosel has a market value barely a tenth that of ProMOS.
Mosel asked Chinatrust Financial Holding Co (
Chinatrust holds the pledged ProMOS stake on behalf of Mosel's creditors. Mosel agreed with lenders on May 28 to pay off the NT$4.7 billion debt in installments with interest in about one year.
The payment due last week wasn't part of the rescheduled payments.
Last month's deal allowed Mosel to keep control of ProMOS, the world's second company to build a plant that makes silicon wafers 300mm in diameter. The bigger wafers yield more than double the number of chips that can be cut from standard-sized 200mm discs and help cut costs by up to 30 percent.
Infineon started selling its stake in ProMOS after ProMOS shareholders voted to remove Infineon employees from the ProMOS board. The German company said last week it's reduced its stake in ProMOS to about 20 percent from 30 percent.
Mosel shares were halted after the company failed to report first-quarter and last year's financial results by an April 30 deadline.
The company expects to resume trading of its shares after it reports earnings results next month, Chang said.
It plans to hold its annual shareholders' meeting in August, two months behind schedule.
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