Two creditor banks yesterday applied to the Taoyuan District Court for a restructuring of debt-ridden Allied Material Technology Corp (展茂光電), formerly the nation's second-biggest maker of color filters for flat panels.
Allied Material shut down its production without warning last month and has failed to repay a total of NT$1.46 billion (US$44 million) of loans to Ta Chong Bank (大眾銀行) and Far Eastern International Bank (遠東國際商銀), according to filings to the GRETAI Securities Market.
"The company has no cash on hand right now," Ta Chong's spokesman James Chiou (
"Our move is designed to prevent the company from manipulating its assets and safeguarding our rights" in the wake of rising doubts about the company's fundraising plan and new management team, Chiou said.
Allied Material owe Ta Chong about NT$900 million.
The two banks also applied for a provisional lien on the company's fifth-generation color filter plant in Taoyuan, which was pledged as collateral for loans.
The lenders said the value of the advanced fabrication plant can fully compensate for the defaulted loan, considering the rising demand for color filters driven by the expected recovery in the flat panel sector.
Color filters, one of major components in making thin-film-transistor liquid-crystal-display panels, account for approximately 20 percent of the total cost of a 17-inch computer panel.
Allied Material spokesman Kuo Fang-chi (
The banks' filing yesterday was the latest episode in the controversy surrounding the troubled company.
Allied Material was suspended from trading on the over-the-counter market on April 9.
Established in 2000, the company fell into financial difficulty when the color-filter industry was hit by overcapacity, which led to a management shakeup in January.
However, conflict between the new management and previous executives has cast a cloud over the company's plan to resume production and raise NT$3 billion through a private placement.
Allied Material's board of directors approved on Tuesday a resolution to jack up its capitalization to as much as NT$280 billion -- a leap from the current NT$11.5 billion -- by selling its stock for as low as NT$0.129 per share.
The decision surprised the market as that would make the company — assuming it succeeds — even bigger than Taiwan Semiconductor Manufacturing Co (台積電), the world's largest made-to-order chipmaker, in capitalization.
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