Financially strapped Cosmos Bank (萬泰銀行) said yesterday it had signed a memorandum of understanding (MOU) to sell a controlling interest to the US hedge-fund group, SAC Private Capital Group LLC, for US$650 million in new preferential shares and convertible bonds to improve its financial structure.
Taipei-based Cosmos also inked an MOU with GE Money, which agreed to raise its 10 percent stake by buying more new common shares and corporate bonds for US$250 million, a statement released by Cosmos showed.
Together, SAC and GE Money would hold approximately 80 percent of the fully diluted interest in Cosmos Bank upon completion of the deal, Cosmos said.
The two groups would buy those shares and bonds at NT$2 per share, representing a discount of about 63 percent to Cosmos' closing price of NT$5.47 on the Taiwan Stock Exchange yesterday, the Financial Supervisory Commission (FSC) said at a press briefing.
"We welcome the deal and understand the efforts made by Cosmos to improve its financial situation by issuing new shares," FSC spokeswoman Susan Chang (張秀蓮) said.
Chang said the financial regulator hoped Cosmos would sign definitive agreements with SAC and GE within one month to inject much-needed capital into the bank.
After the deal, SAC would hold more than 50 percent of Cosmos' shareholding, she said.
"This is an important step for the future of the bank. With SAC and GE Money managing Cosmos' future together, I expect Cosmos to build on their strengths and obtain new skills while leveraging its existing consumer base," Cosmos chairman Hsui Sheng-fa (
Cosmos, the nation's largest cash card issuer, has accumulated more than NT$20 billion (US$606.2 million) in losses mostly stemming from credit card loan losses, FSC data showed. Cosmos has NT$13.77 billion in capital.
The proposed injection of fresh funds is expected to be completed in the fourth quarter of this year and is subject to execution of definitive agreements and conditions therein, including approval by the board of directors, shareholders and the commission.
With the promise of capital injection, Cosmos was able to avoid being placed under government receivership. Yesterday was the deadline set by the FSC for Cosmos' recapitalization plan.
Cosmos had been in talks with possible investors during the past few months for recapitalization, with both SAC and GE on its shortlist.
SAC, which operates a US$12 billion hedge fund, has promised to maintain a long-term partnership with Cosmos and may help the bank return to health, Chang said.
SAV will send a team to take over Cosmos, Chang said, adding that members of the team were also responsible for helping Japan's Shinsei Bank Ltd's turnaround.
To make room for new investors, Cosmos chairman Hsui Sheng-fa and vice chairman Hsu Sen-rong (許顯榮) would resign, the commission said.
Cosmos is scheduled to hold a board of directors' meeting next week for a reshuffle.
Cosmos Bank, established in 1992, operates 63 branches across the country.
GE Money has been a strategic investor in Cosmos Bank since June last year. Cosmos has made significant progress in key areas such as strengthening risk management, cash and credit card business units, expanding its wealth management portfolio and improving collections and operational capabilities.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San