Tue, Aug 08, 2006 - Page 12 News List

AU Optronics arranges loan deal

MONEY NO OBJECT The Hsinchu-based company has teamed up with a number of banks to cover the NT$50 billion cost of a panel production plant in Taichung

BLOOMBERG

AU Optronics Corp (友達光電), the world's third-largest liquid-crystal display maker, hired 20 banks to arrange a NT$50 billion (US$1.5 billion) loan for a plant to make panels.

Bank of Taiwan (台灣銀行), ABN Amro Holding NV, Bank of America Corp and other lenders will arrange the seven-year loan for the factory in Taichung, said a banker involved in the deal.

Hsinchu-based AU Optronics may increase the loan to cover two-thirds of the cost of the plant, estimated at more than NT$100 billion, said the banker, who declined to be identified.

The plant is scheduled to start producing 10,000 glass sheets per month by the end of the year, the company said in a statement last Tuesday. One sheet can be cut into eight 42-inch panels or six 46-inch screens, according to the statement. It is equipped to make as many as 60,000 sheets a month.

Bank of Tokyo-Mitsubishi UFJ Ltd, Calyon, ING Groep NV and Mizuho Corporate Bank Ltd were also on the list of 20 arrangers, who are inviting others to join the loan by the middle of next month for a fee of as much as 15 basis points, the banker said.

AU Optronics will pay interest of 0.55 percentage points more than the primary commercial paper rate for the loan, which includes a guarantee for the company to issue NT$6 billion in bonds within a year, the banker said.

The 90-day rate on primary commercial paper, an unsecured short-term promise to repay principal on a specific date, was 1.80 percent.

The company is paying interest of 0.6 percentage points over the primary commercial paper rate for a seven-year NT$37 billion loan signed in July last year, Bloomberg data shows.

AU Optronics is looking to borrow NT$50 billion for the plant, said Hsiao Ya-wen (蕭雅文), a spokeswoman for the company.

The company announced in April that it would buy Taoyuan-based LCD maker Quanta Display Inc (廣輝電子) for NT$71.7 billion in stock. The purchase will boost AU Optronics' maximum production capacity by 33 percent to 1.19 million square meters of panels a month when it takes over the facilities on Oct. 1.

AU Optronics' second-quarter profit dropped to NT$182 million from NT$470 million a year earlier after panel prices fell. LCD makers faced rising inventories and declining prices in the second quarter.

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