ProMOS Technologies Inc (茂德科技), the nation’s third-largest computer memory chipmaker, said yesterday it would be unable to fully meet its convertible bond obligations next Tuesday despite the promise of a new syndicated loan.
The company said more than 97 percent of its investors intended to redeem the bonds, bringing its estimated obligations to US$327 million. However, the company on Monday only obtained initial approval for NT$3 billion (US$86.65 million) in syndicated loans.
The company has hired Citigroup Global Markets Taiwan Ltd as its representative to negotiate for special terms with its bondholders, a company statement said yesterday.
With Citigroup’s help, “we hope to settle this matter properly ... We will not give up until the last moment,” company chairman Chen Min-liang (陳民良) told a press briefing.
Chen declined to comment when asked about the worst-case scenario.
The company would try all possible means to placate its bondholders, company spokesman Ben Tseng (曾邦助) said when asked if ProMOS planned to make payments at a deep discount.
ProMOS issued US$350 million in five-year overseas convertible bonds on Feb. 14, 2007, with investors allowed to exercise their put option this month.
As the chipmaker failed to make the payments on the first day of redemption, investors will be restricted from trading the stock on credit starting tomorrow, GRETAI Securities Market said.
ProMOS is seeking potential buyers for its manufacturing equipment to help fund its daily operation, said Jessie Peng (彭卓蘭), a vice president at ProMOS.
No substantial progress has been made, she said.
The company has NT$200 million in cash now and will have to pay between NT$800 million and NT$1 billion a month to keep operating.
To avoid more losses, ProMOS said it had kept its factory usage at a very low level and planned to stop making mainstream computer memory chips as prices had dropped below cost.
ProMOS posted losses of NT$22.46 billion in the first three quarters of last year as chip prices plunged on sagging demand because of the economic downturn and a supply glut.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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