ProMOS' share sale may cancelled
The DRAM maker spooked investors after it publicly announced a `back up plan' to raise new funding
ProMos Technologies Inc (茂德科技), a memory chipmaker, said it may borrow as much as NT$8 billion (US$231 million) if foreign investors don't subscribe to a planned share sale, sending its stock down 5.9 percent.
\nProMOS, which lost NT$2 billion in the first half of this year and last month revised its full-year forecast to a loss from a profit, planned to sell US$350 million of stocks and bonds to overseas investors. It's reconsidering amid poor investor demand after Hynix Semiconductor Inc's shares more than halved since the No. 3 memory chipmaker sold US$1.25 billion of stock in June.
\n"Foreign investors may be frightened because of the Hynix example," said Chiang Chih-hau, who manages NT$1.5 billion in bonds and stocks at Barits Securities Corp (倍立證券). "Maybe Taiwan has more gamblers, so it may be easier to raise money in Taiwan."
\nProMOS, a joint venture between Mosel Vitelic Inc (茂矽電子) and Infineon Technologies AG of Germany, approved a plan to raise NT$8 billion in bank loans and the sale of bonds in Taiwan by the end of the year, spokesman Albert Lin said. The company said the move gives it a "back-up" plan if overseas investors refuse to buy shares.
\n"This is an alternative," Lin said. "The decision will depend on the market situation."
\nProMOS, whose shares have fallen 29 percent this year, needs to refinance a US$290 million bank loan to fund a new plant that will produce 300mm wafers, which are increasingly en vogue because of lower production costs and higher chip yields for customers.
\nStill, the company is seeking funds for expansion as the price of its main product, DRAM chips, has fallen 80 percent this year.
\nUnder the share sale plan, Mosel was considering a sale of part of its 48 percent stake in ProMOS to raise US$100 million, Lin said. Mosel earlier said it will lose NT$7.2 billion in the first half of the year, while ProMOS expects to lose NT$1.6 billion this year, after earlier forecasting a NT$3.2 billion profit.
\nTaiwan companies have found it more difficult to raise funds abroad this year compared with previous years, amid a worldwide slump in the valuation of technology companies and falling prices for their products.
\nChunghwa Telecom Co Ltd (中華電信), Taiwan's biggest phone company, twice postponed an overseas share offerings because investors said the listed asking price was far too expensive after its share price plunged 43 percent this year.
\nProMOS has yet to decide on a bank to manage its overseas share and bond sale. It is in talks with local banks about a loan.
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