TFT-LCD makers chase finance for expansion

Taiwanese liquid-crystal-display (LCD) makers are speeding up their fund-raising for the purchase of equipment for new factories amid increasing signs of an upswing in the industry, analysts said yesterday.

"With market sentiment turning in favor of slim screen suppliers, they certainly want to grab the chance to get good bargains," said Benny Lo (盧志恆), an analyst with brokerage Primasia Securities in Taipei.

Recent signs indicated that demand for computers, which consumes the biggest portion of LCD screens now, would buck the past trend of slow third quarters, Lo said.

Local thin-film-transistor (TFT)-LCD panel makers said earlier this year they will resume the construction of advanced factories to meet the rising demand.

AU Optronics Corp (友達光電), Taiwan's top LCD panel maker, said on Tuesday it planned to sell as many as 330 million new shares through American Depository Receipts (ADR). The proceeds will be to buy new equipment and pay back bank loans.

AU Optronics' ADR issuance is the latest fund-raising plan after smaller rivals Chi Mei Optoelectronics Corp (奇美電子) and Chunghwa Picture Tubes Ltd (中華映管) raised US$676 million and US$308.56 million, respectively, in offering new shares overseas earlier this month at small discounts on their market price.

"I believe there will be more fund-raising projects in the pipeline for later this year," said Roger Yu (游智超), an analyst with Polaris Securities Co (寶來證券).

"After Taiwanese flat-panel makers posted huge losses in the first half, they will need aggressive fund-raising plans to finance production expansion," Yu said.

To keep debt ratio low, local TFT-LCD panel makers now are seeking fresh capital by issuing new shares or bonds this year -- instead of borrowing from banks -- for the expansion of plants or purchase of equipment, he said.

Chunghwa Picture, Taiwan's third-largest LCD suppliers, said it planned to raise US$200 million via a syndicated bank loan and another US$400 million from a corporate bond issue in the second half of this year. On Wednesday, the company sold US$253.5 million of new shares in a bid to raise capital to build new plants, according to a pricing sheet from one of the sale's arrangers, ABN Amro Rothschild.

AU Optronics also planned to issue bonds worth NT$6 billion to fund more equipment purchases. The company planned to spend NT$70 billion on new equipment this year.

HannStar Display Corp (瀚宇彩晶) also decided on Tuesday to sell NT$6 billion in bonds later this year after obtaining US$263 million by selling shares overseas in February to fund the construction of a new factory.