Wed, Nov 15, 2006 - Page 12 News List

Lite-On announces capital reduction

IT'S ALL GOING ON The leading maker of peripherals such as DVD writers said it will cut capital by 30 percent and also acquire Li Shin International Enterprise Corp

By Jason Tan  /  STAFF REPORTER

Lite-On Technology Group chairman Sung Kung-yuan speaks at a press briefing yesterday that the company will cut its capital by one-third and recompense its shareholders, and that the company will acquire Li Shin International Enterprise Corp through a share swap deal. Sung is flanked by Lite-On president Lin Hsing-hsien, left, and Li Shin chairman Cheng Chia-cheng.

PHOTO: LIN CHENG-CHI, TAIPEI TIMES

Lite-On Technology Corp (光寶科技), one of the nation's biggest makers of peripheral equipment for computers, yesterday announced a reduction in capital and an acquisition of a power supply company.

Lite-On said it would cut its capital by 30 percent, or an amount of NT$8.73 billion (US$266 million), to boost return on equity (ROE).

Lite-On's paid-in capital will be reduced to NT$20.37 billion and shareholders will receive NT$3 per share after the reduction takes effect on May 21 next year, the company said.

"We have excess cash and we want to reward our shareholders," Lite-On spokesman Andrew Lin (林群) told reporters at a press briefing.

He said the company had sufficient cash flow for mergers and acquisitions, and had decided to reduce capital to benefit stockholders.

Lite-On is not alone in cutting capital to boost ROE, with another recent example being Sunplus Technology Co (凌陽科技), a maker of chips used in DVD and VCD players.

Sunplus announced on Oct. 18 that it will halve its paid-in capital in the first quarter of next year and return NT$5.11 billion, or NT$5 per share, to its shareholders.

Lite-On said last Thursday that it aims to achieve a compound annual growth rate of 20 percent in sales for the next two years, driven by high-margin products.

The company -- whose core businesses are power supplies, computer chassis, light-emitting diodes and imaging products -- reported record third-quarter results with 11.7 percent gross margins and 5 percent operating margins.

Lite-On also announced yesterday it will acquire Li Shin International Enterprise Corp (力信興業) through a share swap, to strengthen its power supply capabilities.

The deal is tentatively sched-uled to be completed on July 30 next year, with one Li Shin share to be exchanged for 0.58 Lite-On shares.

"The companies complement each other in terms of clientele and technologies. The new acquisition will give us an edge in moving into [manufacturing] power supplies for liquid-crystal-display TVs," Lin said.

Lite-On acquired 20 percent of Li Shin's shares in May, as well as 35 percent of the latter's subsidiary, Logah Technology Inc (力銘科技).

Power supply revenues for Lite-On are NT$25 billion and will rise to NT$35 billion this year after combining contributions from Li Shin and Logah, according to a Lite-On statement issued last week.

Revenues this year will be double the NT$16.8 billion recorded in 2003, the company said.

News of the capital reduction was leaked during trading hours yesterday, which boosted Lite-On's shares by 6.4 percent to close at NT$44.6 on the Taiwan Stock Exchange.

Shares of Li Shin remained unchanged at NT$25.2.

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