Shares of Chimei Innolux Corp (奇美電子) tumbled 5.9 percent yesterday after its key shareholder, Hon Hai Precision Industries Co (鴻海精密), dismissed reports that it intended to get full control of the cash-strapped LCD panel manufacturer in the imminent management shuffle.
Chimei Innolux fell NT$0.80 to NT$12.75 as Hon Hai’s announcement dashed investors’ hope that the nation’s top LCD company would obtain much-needed support from the firm when negotiating with banks for a syndicated loan of NT$40 billion (US$1.33 billion) to improve its financial structure.
The speculation about the board shake-up heated up after Chimei Innolux chairman Frank Liao (廖錦祥) resigned on Friday last week because of health concerns. Last month, Liao met Financial Supervisory Commission Chairman Chen Yuh-chang (陳裕璋) to seek the government’s assistance in securing bank loans, according to reports by several Chinese-language newspapers, including the Liberty Times (the sister newspaper of the Taipei Times).
“Hon Hai is a minor shareholder of Chimei Innolux. Chimei Innolux’s operations will be decided by its board,” Hon Hai said in a filing to the Taiwan Stock Exchange on Wednesday night.
“The reports about the company’s [Hon Hai’s] intention to take control of Chimei Innolux are not true,” said the world’s biggest electronics manufacturing service provider, with big-name customers such as Apple Inc, Dell Inc and Sony Corp.
Hon Hai has a 1.77 percent stake in Chimei Innolux, but as a group, it holds 12.9 percent — including a 2.91 percent stake owned by Hon Hai Group (鴻海集團) chairman Terry Gou (郭台銘). Chimei Corp (奇美實業) is the biggest shareholder of Chimei Innolux, with a 17.14 percent stake.
As one of Chimei Innolux’s major customers, Hon Hai said it would “continue to assist Chimei in expanding its business aggressively.”
Chimei Innolux is the entity created from a three-way merger of Chimei Optoelectronics Corp (奇美電子), Hon Hai’s LCD manufacturing arm, Innolux Display Corp (群創光電), and TPO Display Corp (統寶光電) last year.
Yesterday, Chimei Innolux said it had received notification from the Korea Fair Trade Commission, which fined the company 1.55 billion won (US$1.37 million) for breaking the country’s fair trade rules, according to the company’s filing to the Taiwan Stock Exchange.
The fine was far less than the 28.44 billion won the commission slapped on AU Optronics Corp (友達光電), Taiwan’s second-largest LCD panel maker.
Chimei Innolux said it was studying the ruling and would adopt appropriate countermeasures. The company also said the financial penalty would not seriously affect its finances and business.
Separately, AU Optronics yesterday said that revenues dropped 2 percent to NT$30.6 billion last month from October’s NT$31.21 billion, hitting the lowest level in nine months.
Meanwhile, Chunghwa Picture Tubes Ltd (中華映管) said revenues last month fell 15.7 percent month-on-month to NT$4.4 billion, while HannStar Display Corp (瀚宇彩晶) saw revenues drop 6.9 percent to NT$3.34 billion.