Fri, Jul 24, 2009 - Page 11 News List

Chunghwa seeks US$305 million for 21 percent stake


Chunghwa Picture Tubes Ltd (中華映管), the unprofitable Taiwanese display maker, is seeking about US$305 million to sell a 21 percent stake, according to documents from sale arrangers.

The company will offer as many as 100 million new global depository receipts, equivalent to 2.5 billion common shares, at 15 percent to 20 percent below Chunghwa’s closing price in Taipei yesterday, according to the e-mailed documents. Chief financial officer James Wu (巫俊毅) declined to confirm or deny the terms of the sale.

The sale is separate from the NT$10 billion (US$304 million) stake that the company may sell to Compal Electronics Inc (仁寶) and Tatung Group (大同集團) within three months and the proceeds will be used to help Chunghwa buy materials and pay debt, Wu said in an interview yesterday. Chunghwa shares fell for an eighth day on concern that the sale will dilute the value of existing stock.

“It’s a slightly negative signal that the company is heavily inflating its share capital with a big discount,” said Edward Du (杜立民), who helps manage US$658 million in funds at First Securities Investment Trust Corp (第一金投信).

Du does not own Chunghwa Picture shares.

Chunghwa Picture, based in Taoyuan, fell 3.4 percent to NT$4.83, the lowest since July 7, in Taipei trading.

Of the GDRs being sold, 80 percent will be offered internationally and the remaining 20 percent offered to existing shareholders, according to the sale documents.

UBS AG and Royal Bank of Scotland Group Plc are arranging the sale.

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