Thu, Dec 01, 2011 - Page 11 News List

Formosa Plastics buys NT$30bn Nanya shares

FUNDRAISER:Subsidiaries of the PC DRAM chipmaker’s parent group purchased almost 11 billion shares at NT$2.77 each, raising funds to replenish Nanya’s capital

By Lisa Wang  /  Staff Reporter, with CNA

Nanya Technology Corp (南亞科技), the nation’s biggest PC DRAM chipmaker, yesterday said it has raised NT$30 billion (US$988.6 million) by issuing 10.83 billion common shares via private placement at NT$2.77 per share.

Formosa Plastics Group (FPG, 台塑集團), the parent company of Nanya Technology, subscribed to the shares through its subsidiaries Formosa Chemicals & Fibre Corp (台灣化學纖維), Nan Ya Plastics Corp (南亞塑膠), Formosa Plastics Corp (台灣塑膠) and Formosa Petrochemical Corp (台塑石化), according to a company statement.

Nanya said it would use the proceeds to improve the company’s financial structure and replenish its working capital.

FPG’s injection of NT$30 billion into Nanya Technology came as the chipmaker’s book value fell to NT$0.94 at the end of the third quarter, from NT$3.92 at the end of the second quarter, amid massive losses.

In the first nine months of this year, Nanya Technology incurred NT$28.88 billion in net losses, compared with NT$4.98 billion in net losses a year earlier, prompting the company to seek funds to maintain its operations.

Grand Cathay Securities Corp (大華證券) analyst Meissen Chang, however, said Nanya Technology is expected to run out of the new funding in about six months.

“I doubt its rich parent will inject such an amount of funds again any time soon,” Chang said.

Shares of Nanya fell 6.72 percent to NT$2.36 yesterday on the Taiwan Stock Exchange, while the TAIEX was down 1.21 percent.

Recent sell-offs by foreign institutional investors of Nanya shares have prompted more investors to dump the stock amid rising fears that the company will face financial difficulties with its losses on the rise under the current unfavorable market circumstances.

According to a report by the Chinese-language DigiTimes citing industry sources, contract prices for DRAM chips dropped almost 8 percent in the second half of last month because of sluggish demand.

DRAMexchange Technology Inc (集邦科技), a Taipei-based market researcher, said the price of the benchmark DDR3 2-gigabit DRAM chips on the spot market has dropped about 70 percent from May to US$0.74.

“There is no sign that the global DRAM demand will make a quick turnaround as the personal computer market continues to slow,” Chang said.

“In the past few trading sessions, Nanya Technology has become a focus of foreign institutional selling due to the gloomy outlook,” Chang said. “The selling continues today.”

The analyst said the stock is expected to encounter more selling amid weak sentiment toward its earnings outlook.

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