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.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure