Wed, Jan 04, 2006 - Page 10 News List

LCD firm says plant financing in place

CAPACITY EXPANSION A company denied a media report saying that it had been unable to raise funds for a new factory, but analysts said difficulties lay ahead


Chunghwa Picture Tubes Ltd (中華映管), the nation's third-largest maker of liquid-crystal-display (LCD) panels for computers and televisions, yesterday said it has obtained the capital it needs for an advanced plant, and plans to raise more for further capacity expansion this year.

Chunghwa Picture Tubes raised NT$16 billion (US$490 million) in October last year for a new cost-effective or sixth-generation (6G) plant capable of processing 60,000 glass substrates a month in the initial phase, company spokesman James Wu (巫俊毅) said.

"We will seek a variety of ways, including issuing bonds, to raise funds this year to expand the factory's capacity," Wu said, without giving a specific number.

Monthly output can be expanded to a maximum of 90,000 glass substrates, Wu said.

The new plant will help boost Chunghwa Picture Tubes' production by 50 percent from the 15 million panels measuring bigger than 10 inches in size manufactured last year, according to Wu.

Wu's remarks came after Chinese-language newspaper the Economic Daily News said in a report yesterday that Chunghwa Picture Tubes, along with other local smaller flat panel makers, had failed to raise the NT$13 billion it needed for the new plant amid increasing difficulties for fundraising.

The report said smaller players would find it difficult to raise funds because of weaker profitability.

"We obtained sufficient capital to build a new plant through two large-scale syndicate bank loans in the second half of last year," Wu said in a statement filed to the Taiwan Stock Exchange.

In July, Chunghwa Picture Tubes raised US$200 million in funds from five banks led by Citibank to build a new color filter plant. The plant forms part of the company's plan to produce LCD panels at a cost-effective 6G factory, according to the statement.

Wu said his company swung to the black in August last year.

But that makes it a laggard compared to bigger rivals AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美光電), which returned to profitability in the first half of last year.

"Indeed, local flat-panel makers, especially second-tier players, will face greater pressure in the search for new funds this year," said Ken Yu (余文耀) SinoPac Securities Corp (建華證券).

Most banks were close to the cap on granting loans to a single company following massive fund-raising projects by the firms over the past two years, he said.

Rights offerings and issuing bonds will be possible ways for them to raise more funds, but at a higher cost, Yu said.

"Overseas investors are still interested in buying the bonds, if they offer better yields," Yu said.

But those companies will face a bumpy ride toward gaining financial support as the Financial Supervisory Commission has tightened its control over local LCD panel makers' fundraising in order to push for more mergers, Yu said.

Chunghwa Picture Tubes' shares fell 1.93 percent to NT$10.15 on the Taiwan Stock Exchange yesterday.

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