Sat, Aug 08, 2009 - Page 12 News List

Elpida Inc to sell preferred shares to government bank

CAPITAL NEEDED: The memory chip maker is trying to raise ¥160 billion from public and private sources after falling chip prices led to a record loss

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Elpida Memory Inc, Japan’s biggest maker of computer-memory chips, will sell ¥30 billion (US$314 million) in shares to the state-run Development Bank of Japan.

Tokyo-based Elpida will issue the preferred stock, convertible into 23.7 million common shares from 2011, on Aug. 31, the company said in a filing to the finance ministry yesterday.

The sale is a part of Elpida’s plan to raise ¥160 billion from the government, banks and a Taiwanese partner, after falling chip prices led to a record loss last year.

The company said in June it would use the funds to develop smaller chips to cut costs and better compete with the industry’s leader Samsung Electronics Co.

Converting all the preferred shares into new common stock may make the state-run bank Elpida’s biggest shareholder with a 14.3 percent stake. Japan Trustee Services is currently the chipmaker’s biggest investor with a 13.7 percent holding, company shareholding data compiled by Bloomberg showed.

The shares gained 12 percent to close at ¥1,340 in Tokyo trading yesterday, the highest since Oct. 14. Japan’s benchmark Nikkei 225 Stock Average rose 0.2 percent.

Elpida earlier this month reported its smallest loss in three quarters as production cuts helped prices rebound from record lows.

The net loss was ¥44.5 billion in the three months to June 30, compared with ¥13.8 billion a year earlier.

The company reached a technology partnership deal with Taiwanese government-backed Taiwan Memory Co (TMC, 台灣創新記憶體公司) in April to help TMC restructure Taiwan’s dynamic random access memory (DRAM) companies.

In return, TMC is likely to hold a 9.5 percent share in Elpida, Industrial Development Bureau Director-General Woody Duh (杜紫軍) said on July 22.

Earlier this week, Elpida agreed to buy assets and technology for manufacturing graphics DRAM memory from Germany’s Qimonda AG, a statement to the Tokyo Stock Exchange said on Thursday.

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