Creditor banks of Chimei Innolux Corp (奇美電子) have agreed to lower the interest rate premium they want to charge on a rollover of the flat-panel maker’s massive debt, banking sources said on Friday.
According to the sources, a meeting held on Friday by a group of creditor banks, led by the nation’s largest lender Bank of Taiwan (台灣銀行), ended with the banks agreeing to add about 0.7 percentage points to the original rates imposed on Chimei Innolux’s loans.
This rate increase was lower than the 1 percentage point increase the banks had requested at a previous meeting, the sources said. They described the banks’ move as a concession to the borrower.
“We have reached certain consensus with credit banks,” said Chimei spokesman Eddie Chen (陳彥松) by telephone.
The deal included an agreement by the company to nominate a new chairman next month before signing the rollover agreement would be inked. He declined to reveal further details.
Friday’s meeting was the second held by the more than 30 banks that have outstanding loans with Chimei Innolux, to resolve the company’s debt problems at a period when the global flatpanel business is going through a downturn.
At the first meeting last month, creditor banks agreed to rollover Chimei Innolux’s NT$200 billion (US$6.76 billion) in loans for two to three years, while asking to add one percentage point to the original interest rate.
In the latest meeting, the extension periods for the debt remained the same. The maturity of the loans, which were previously scheduled to be repaid in 2012 and 2013, will be extended for another three years, while the maturity of the loans previously scheduled to be repaid in 2014 will be extended for another two years.
Bank of Taiwan representatives said the creditor banks were showing their support for the government’s policy of assisting the local flat-screen industry by reaching the agreement with Chimei Innolux to resolve its debt problems.
The group of banks also requested Chimei Innolux’s majority shareholders increase their investment in the company by NT$40 billion over the next three years in response to the creditors’ intention to help the flat panel maker.
Conglomerate Chi Mei Corp (奇美實業) reportedly holds a 13.57 percent stake in Chimei Innolux, Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, owns a 1.77 percent stake and Hon Hai’s chairman Terry Gou (郭台銘) has a 2.91 percent share.