Chimei Innolux Corp (CMI, 奇美電子) and its creditors, led by the Bank of Taiwan (臺灣銀行), yesterday signed an agreement to extend a loan rollover by another two to three years.
Under the company’s new debt restructuring plan, Chimei will repay the NT$240 billion in syndicated loans in five years until 2016, with most of its debt repayment falling in the last two years, local cable TV network UBN yesterday quoted Chimei spokesman Eddie Chen (陳彥松) as saying at the Taiwan Stock Exchange.
According to the state-run Bank of Taiwan, loans that were due to mature this year and next year have been extended by another three years, while those due in 2014 will be extended by another two years.
The rollover agreement came after the nation’s largest LCD panel maker last month named chief executive officer Tuan Hsing-chien (段行建) its new chairman and announced plans to increase capital over the next three years to shore up its finances.
Chimei’s former chairman, Frank Liao (廖錦祥), offered to step down on Dec. 2, citing health problems. Creditor banks had since then demanded that the company present a new management team and its fundraising plans before agreeing to an extension of its NT$200 billion syndicated loans.
“The debt extension agreement entered by Chimei Innolux and the bank consortium is a reflection of the financial industry’s continuous recognition and support of CMI’s past efforts and future plans for its TFT-LCD business,” Tuan said in a statement yesterday.
The company has promised to raise NT$50 billion in new capital in the coming three years, with NT$20 billion to be raised this year, NT$20 billion next year and the remaining NT$10 billion in 2014, Chen told reporters at the Taiwan Stock Exchange.
Chimei is a subsidiary of Hon Hai Precision Industry Co (鴻海精密), the world’s largest maker of electronics parts.
The company and its local peers, including AU Optronics Corp (AUO, 友達光電), have been hit hard by falling panel prices amid sluggish demand from the US and Europe, as well as an intensified competition from bigger South Korean rivals, Samsung Electronics Co and LG Display Co, resulting in wider losses for last year.
Chimei on Friday last week reported a net loss of NT$64.76 billion, or a loss per share of NT$8.81, for last year, while AUO said in February it incurred a net loss of NT$61.45 billion, or a loss per share of NT$6.94, last year. In 2010, Chimei reported a net loss of NT$14.84 billion, while AUO posted a net profit of NT$7.41 billion.
Last year, Chimei sought help from the Ministry of Economic Affairs to negotiate a debt restructuring plan, which led to two meetings — on Jan. 20 and Feb. 17 — with its creditors to draft a framework for its debt restructuring and amortization plans, the Bank of Taiwan said.
“More than two-thirds of its creditors have agreed to the company’s [Chimei] debt restructuring plan, on the back of its pledge to increase capital and the appointment of a new chairman,” the bank said in a separate statement yesterday.