Cash-strapped computer memory chipmaker ProMOS Technologies Inc (茂德科技) started to buy back US$335 million in convertible bonds at US$100 each yesterday, the company’s filing with Singapore Exchange Securities Trading Ltd showed.
“The tender offer is intended to fully satisfy requests submitted with respect to 97.4 percent of the bonds outstanding to redeem the bonds on February 14, 2009,” ProMOS said in the filing.
The prices of the tender offer represent just 10 percent, or a deep discount of 90 percent, of the bonds face value of US$1,000.
The tender offer expires on March 21.
Apart from a base tender of US$100, the company provides an early tender premium of US$100 and an extra success premium of up to US$65, if interested bondholders participate in the tender before March 2, the filing said.
For instance, if a bondholder tenders bonds before the early tender time and the tender offer success rate exceeds 82 percent, the bondholders will receive US$230 for each US$1,000 in bondholdings (including a US$100 base tender, US$100 early tender premium and US$30 in extra success premium) but excluding brokerage fees.
The repayment will rise to US$265 per US$1,000 principal if the success rate is above 86 percent.
However, the whole tender offer will be considered a failure if the minimum tender acceptance rate is below 79 percent, ProMOS said.
“The tender offer is conditional on a minimum tender acceptance rate of 79 percent,” the company said in its filing.
The Hsinchu-based manufacturer of dynamic random access memory (DRAM) chips has been under immense financial pressure after 97.4 percent of its bondholders applied on Feb. 14 to redeem the five-year overseas convertible bonds, which the company issued on Feb. 14, 2007 and will mature in 2012.
ProMOS said on Thursday it faced US$326.92 million in principal redemption requests out of a total of US$335.62 million in outstanding bonds.
ProMOS experienced an operating loss of NT$24.5 billion last year. It now has debt totaling NT$85.9 billion, while its cash balance dropped to NT$200 million as of Jan. 31, from NT$2.6 billion as of June 30 last year, a separate filing showed on Thursday.
To help repay the debt and avoid a default, ProMOS had applied for a syndicated loan of NT$5 billion (US$144 million) from eight state-run banks.
However, it has only secured NT$3 billion, less than a third of what it needs to repay the debt.
Shares of ProMOS, which were downgraded to a full-cash delivery stock by stock exchange regulator on Thursday, continued falling by the daily limit yesterday and closed at NT$1.28 on the GRETAI Securities Market.