Sat, Feb 28, 2009 - Page 12 News List

CPT asks for help on loan extension

DISADVANTAGE: An analyst said that unlike other flat-panel makers, Chunghwa Picture Tubes was having difficulties because its facilities were not cost-competitive


Chunghwa Picture Tubes Ltd (CPT, 中華映管), the nation’s third-largest flat-panel maker, said yesterday it was seeking government assistance to get a one-year extension on about NT$11 billion (US$314.8 million) in bank loans after suffering massive losses last year.

That makes CPT the first local liquid-crystal-display (LCD) panel maker to seek government support after posting NT$11.68 billion in pre-tax losses last year as global economic woes dealt a serious blow to consumer spending and demand for electronics.

“As there are still no signs of an end to the current economic slowdown, Chunghwa Picture Tubes has to be prepared for the worst,” company spokesman James Wu (巫俊毅) said in a filing to the Taiwan Stock Exchange.


The Taoyuan-based company plans to negotiate with creditor banks to adjust payment terms, Wu said.

“We have to reserve as much cash as we can to cope with the [economic] uncertainty,” Wu said, stressing that the company was operating normally. “We are not asking for a new cash injection or for more bank loans.”

CPT said it was seeking a one-year rollover on the NT$11 billion loans that will be due by the end of the year, following in the steps of local computer memory chipmakers ProMOS Technologies Inc (茂德科技) and Powerchip Semiconductor Corp (力晶半導體).

The Industrial Development Bureau, which is in charge of helping local firms in solving short-term financial difficulties, said it had received CPT’s request for a bank loan extension.

“This is part of our debt repayment plans,” said Jason Huang (黃騰威), a public relations official at Chunghwa Picture.

Later this month, CPT will have to pay back investors US$1.5 billion in overseas convertible bonds if all bondholders exercise their put option and sell the bonds back to the company.

As of the end of last year, the company had NT$24 billion in cash and cash equivalents, its balance sheet showed.

“Chunghwa Picture is running out of cash mostly because it cannot make cost-competitive panels at existing plants, making it the weakest of local panel makers in generating cash from operation,” said Jeff Pu (蒲得宇), an LCD panel industry analyst at Yuanta Securities (元大證券).

Pu said most local panel companies — with the exception of CPT — should be able to weather the industry downturn by using profits earned from the last upturn.


“Taiwan’s flat panel makers will not follow in the steps of local computer memory chipmakers [which need government funding to survive the financial crisis]” Pu said, citing panel makers’ relatively healthier cash position despite posting huge losses last year.

The nation’s two largest panel makers — AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子) — had NT$83.91 billion and NT$110.48 billion in cash and cash equivalents on hand respectively, their financial statements showed.

Shares of Chunghwa Picture plunged by 6.88 percent to close at NT$2.98 yesterday, underperforming the broader stock market, which inched up 0.85 percent.

The stock price of parent company Tatung Co (大同), which has a 28 percent stake in CPT, dropped 5.53 percent to NT$5.30.

Andre Chang (張致竑), an analyst at Citigroup Global Markets, said in a client note yesterday that the brokerage was maintaining its “sell” recommendation on Tatung, saying CPT’s problems could raise concerns about Tatung’s financial strength.

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