Sat, Mar 14, 2009 - Page 12 News List

ProMOS shaken by guarantor rumors

COLD FEET? Reports that the chairman had asked that his status as a joint guarantor be changed to a general guarantor was another blow to the financially troubled firm

By Lisa Wang  /  STAFF REPORTER

ProMOS Technologies Inc (茂德科技), the nation's No. 3 computer chipmaker, yesterday said chairman Chen Min-liang (陳民良) would keep his promise by acting as a guarantor for the company's newly approved NT$3 billion (US$87 million) in bank loans. The firm dismissed speculation that creditor banks might reconsider the capital injection because of Chen's request for a change in status.

ProMOS’ share price plunged 6.19 percent to a record low of NT$0.91 yesterday amid renewed concern about the company’s financial status. The benchmark index closed up 3 percent yesterday.

The NT$3 billion loans are crucial as they are the only capital available for the Hsinchu-based chipmaker to repay debt. ProMOS has offered to buy back US$335.6 million in outstanding convertible bonds for 10 percent of their face value after failing to raise sufficient funds to make full repayment of the debt. The tender offer will end on March 21.

“The company chairman did not break the promise he made to the creditor banks. He is still a guarantor for the syndicated loans,” ProMOS spokesman Ben Tseng (曾邦助) told the Taipei Times by telephone.

Tseng's clarification came after Chinese-language newspaper the Commercial Times said yesterday that Chen had refused to be a joint guarantor for the additional loans as originally agreed in December, which was one of requirements for the loans’ approval. The report said he had changed his mind and wanted to be a “general guarantor,” which carries less responsibility if the loans default.

Tseng said Chen did not reveal details on his guarantor status.

State-run Bank of Taiwan (臺灣銀行), ProMOS’ biggest creditor, could not be reached for comment as of press time. But Susan Chang (張秀蓮), chairwoman of the bank, told Dow Jones Newswires earlier yesterday that Chen wished to change his status to a “general” guarantor, instead of a “joint” guarantor.

A general guarantor has the right to claim money back from the borrowers in case of a loan default, while a joint guarantor enjoys no legal right to reclaim the money.

ProMOS posted an operating loss of NT$24.5 billion last year, it said on Feb. 19. Its cash dropped to NT$200 million as of Jan. 31 from NT$2.6 billion last June, it said.

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