The government said yesterday it was in talks with creditors of ProMOS Technologies Inc (茂德科技) to help the beleaguered chipmaker by the end of this month stay solvent.
The announcement may be a last-ditch effort to rescue the nation’s debt-ridden manufacturers of dynamic random access memory (DRAM) chips after the government rejected two industry consolidation proposals from DRAM makers over the past three weeks, citing unfavorable terms.
“As ProMOS is facing pressing problems paying debts, government representatives met yesterday [Wednesday] with the company’s major credit banks to resolve its financial difficulties,” Chen Chao-yi (陳昭義), director-general of the Industrial Development Bureau, said by telephone.
But the Chinese-language Economic Daily News reported yesterday that following Wednesday’s meeting, the government may not inject funds into ProMOS and credit banks were not likely to offer more loans to the firm.
ProMOS is facing mounting pressure to repay US$330 million in overseas corporate debt that will mature on Feb. 14.
On Monday, the Ministry of Economic Affairs dashed the company’s hopes of getting governmental bailout funds for a consolidation plan filed with Tokyo-based Elpida Memory Inc.
The ministry said the plan did not meet its requirements.
“We had originally hoped to solve this problem by endorsing their consolidation and bailout proposals. But now we are worried [this is unlikely],” Chen said.
He declined to comment on the newspaper’s report that the ministry had consulted ProMOS’ creditors about offering short-term loans for the chipmaker to repay its bond holders in exchange for ProMOS corporate bonds and converting debts into ProMOS shares.
Government agencies will hold more meetings with the companies’ credit banks and hopefully reach a solution by the Lunar New Year holiday, he said.
From 2003 to 2007, ProMOS obtained NT$63.7 billion in syndicated loans from local banks — mostly state-controlled financial institutions including Bank of Taiwan (台灣銀行) and Taiwan Cooperative Bank (合作金庫銀行) — to finance its capacity expansion.
These two banks yesterday downplayed their role in the government’s rescue efforts, including the government’s idea of making the banks shareholders in ProMOS.
“We have not heard this information yet,” Taiwan Cooperative Bank president Lin Tien (林田) told the Taipei Times. “Bank of Taiwan is the main credit bank, not Taiwan Cooperative Bank.”
An official at the bank’s public relations department who preferred to remain anonymous said yesterday the Bank of Taiwan would not comment on the meeting with governmental officials or on the plans to help ProMOS.
The plan to convert debt into shares of ProMOS would require approval from the banks’ shareholders. For government-owned or controlled banks, that would mean the Ministry of Finance.
The ministry did not comment on the option yesterday.
ProMOS and the nation’s top DRAM maker, Powerchip Semiconductor Corp (力晶半導體), each submitted bailout proposals recently to the government. Although both were rejected, the companies said they would tweak and resubmit their plans.
“That is for certain,” ProMOS spokesman Ben Tseng (曾邦助) said on the phone. “We haven’t given up yet.”
As part of its efforts to raise capital, ProMOS has sold NT$580 million in manufacturing equipment to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, ProMOS said in a stock exchange filing yesterday.
Shares of ProMOS fell 6.93 percent yesterday to NT$1.88 on renewed concern about the firm’s solvency.
Shares of Powerchip and Nanya Technology Corp (南亞科技) fell 6.52 percent and 6.97 percent to NT$3.3 and NT$5.47 respectively.
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