Tue, Feb 14, 2012 - Page 12 News List

Foxconn cancels bond sale over Europe debt crisis

Bloomberg

Foxconn Technology Co (鴻準), a maker of metal casings for Apple Inc, canceled a plan to sell as much as NT$8 billion (US$271 million) in convertible bonds, citing the effect of Europe’s debt crisis on debt markets.

The application to the financial regulator to sell the securities was withdrawn, the Taipei-based company said in an exchange filing yesterday. The company’s operations and outlook remain strong, it said.

Foxconn, which supplies the metal cases for Apple’s iPad and MacBooks, is looking to expand capacity and increase output for new products including Ultrabooks, high-end notebook computers with thin metal shells, from Hewlett-Packard Co and Acer Inc (宏碁).

The unit of Foxconn Technology Group (富士康科技集團), the world’s largest custom electronics maker, still needs cash, said Angela Hsiang (向子慧), who rates the stock “outperform” at KGI Securities Co (凱基證券).

“They’ve been riding on Apple’s growth trend to move into Ultrabook cases, and they need this cash to expand their capacity,” Hsiang said.

The company also assembles games consoles for Nintendo Co, she said.

Foxconn Technology has NT$2.2 billion of bond payments due this year, according to Bloomberg data. The company had NT$24.5 billion in cash and equivalents at the end of September last year, with NT$18 billion in short-term borrowings and other short-term liabilities, excluding accounts payable, according to data compiled by Bloomberg.

The company, 10 percent directly owned by iPhone and iPad maker Hon Hai Precision Industry Co (鴻海精密), supplies about 95 percent of its metal casings output to Apple, said Allen Chang (張博凱), who rates the stock “neutral” at Barclays Capital Inc.

A cancelation of a convertible bond sale may result in the company switching to a straight bond offering, a move that could be positive for the shares because a convertibles issuance may dilute the stock, Chang said.

The company’s shares gained 2.67 percent to end at NT$134.50 in Taipei trading yesterday, while the benchmark TAIEX added 0.64 percent, Taiwan Stock Exchange data showed.

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