Nanya Technology Corp (南亞科技), the nation’s second-largest maker of computer memory chips, yesterday said the company’s board had approved a proposal to slash 66.43 percent of outstanding share capital to help improve its financial structure after suffering massive losses during the industry’s severe downturn.
The capital reduction will help lift Nanya’s book value to more than NT$10 per share, compared with NT$6.1 per share at the end of last year, company spokesman Pai Pei-lin (白培霖) said yesterday.
The move “will help absorb accumulated losses and improve the company’s financial structure,” Pai said.
Nanya plans to cut NT$31.18 billion (US$922 million), or two-thirds of its current NT$46.93 billion in outstanding share capital, to NT$15.75 billion.
The Taoyuan-based chipmaker accumulated NT$35.23 billion in losses last year as prices fell because of market glut in memory chips and shrinking demand.
Because there is no clear sign of a solid recovery, Nanya may report more than NT$8 billion in quarterly losses for the first three months of this year and may suffer another money-losing year this year, said Rick Hsu (徐稦成), a semiconductor analyst at Nomura Securities Co’s Taipei branch.
Nanya’s board also gave the go-ahead to a fund-raising plan that aims to sell a maximum of 4 billion new common shares in private placement and offer up to 4 billion new shares to the public, hopefully by the end of this year, Pai said.
The fundraising plan — which Pai said would gain support from its parent, Formosa Plastics Group (台塑集團) — could help Nanya raise a combined NT$66.88 billion in new capital based on the stock’s closing price of NT$8.36 per share yesterday.
The company plans to spend the proceeds on new equipment, which would help it upgrade to next-generation 50-nanometer stack technology from US technological partner Micron Technology Inc, Pai said.
This year, Nanya plans to spend less than NT$20 billion on new equipment, compared with last year’s NT$12 billion, he said.
Separately, Pai said the company plans to hike chip prices by another 10 percent during the second half of this month because drastic output cuts industry-wide have helped ease the glut in memory chips following a 5 percent to 10 percent price hike in the first half of the month.
“Demand is not as bad as we thought. And customers’ inventories have fallen drastically to approach normal levels,” Pai said. “Our customers have even started feeling supply constraint recently.”