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.
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