Eight state banks reached a consensus late last night to approve a NT$3 billion (US$87.6 million) loan to money-losing computer memory chipmaker ProMOS Technologies Inc (茂德科技), which is looking for funds to repay US$330 million in convertible bonds later this week. The loan still needs to be approved by each bank’s board.
The loan is less than the NT$5 billion ProMOS had applied for, as some banks fear the loan could become a bad debt if ProMOS failed despite their help.
“The eight lenders with government stakes agreed last night to grant ProMOS NT$3 billion in a syndicated loan,” the banks said in a brief statement.
The approval came after banks led by the Bank of Taiwan (臺灣銀行) had been engaged in discussions all day to iron out disagreement between the banks and ProMOS over the necessity of the loan and its terms. Bank of Taiwan chairwoman Susan Chang (張秀蓮) had said earlier yesterday that “ProMOS will not be able to meet its [payment] deadline if the banks fail to reach a conclusion on the matter today.”
The late-night breakthrough did help ProMOS avoid the risk of imminent insolvency if it defaults on the five-year bonds next Tuesday, which would cause a ripple effect of defaults on all its bank loans, as creditors could demand that the Hsinchu-based firm repay the debts in the short term.
Holders of ProMOS’ convertible bonds will today begin to place a put option on the debt, which would allow them to sell the bonds back to the chipmaker.
“We will use the bank loans to repay ProMOS bondholders,” ProMOS spokesman Ben Tseng (曾邦助) said last night.
Tseng said Citibank would represent ProMOS in negotiations with the bondholders to determine a proper price for debt redemption. He declined to reveal the size of the discount on the bonds the company plans to propose to its investors.
“The only reason [for the approval] is that credit banks hope to take more debts back once ProMOS’ operations get back on track, helped by the government’s bailout plan,” Kenneth Lee (李克揚), a semiconductor analyst with Primasia Securities Co, told the Taipei Times yesterday.
In other words, ProMOS could be part of the government’s greater efforts to rescue the nation’s DRAM industry, Lee said.
In the severest industrial slump since last year, ProMOS lost NT$22.46 billion in the first three quarters of last year and NT$7.32 billion in 2007 as chip prices collapsed as a result of a supply glut.
ProMOS had borrowed NT$63.7 billion in syndicated loans from 2003 to 2007, mostly from the nation’s state-controlled banks, including the Bank of Taiwan and Taiwan Cooperative Bank (合作金庫銀行), the chipmaker’s filings to the Taiwan Stock Exchange show.
As of the end of the third quarter of last year, ProMOS had an aggregate of NT$89.52 billion in debts, including NT$42.66 billion in long-term debt.
Minister of Economic Affairs Yiin Chii-ming (尹啟銘) said on Friday that he expected banks to approve the loan because ProMOS had provided enough collateral for the loan, despite concerns that it might waste taxpayers’ money.
President Ma Ying-jeou (馬英九) said earlier the government had to rescue the DRAM industry because it represents an important industry employing many people in Taiwan. Democratic Progressive Party Chairwoman Tsai Ing-wen (蔡英文), however, has cautioned against attempts to rescue ProMOS.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique