Chi Mei Optoelectronics Corp (奇美電子), the nation's second largest maker of flat-panel displays, scrapped plans to sell NT$20 billion (US$575 million) of new shares in the US, saying the US-Iraq war weakened demand from investors.
The company, whose shares have fallen by half the past seven months, may sell new shares in Taiwan instead as early as the second quarter to avoid "geopolitical uncertainties," said Chi Mei's finance department head, Eddie Chen (
"The US-Iraq war and other factors have cast shadows and caused overseas markets to deviate from our forecast," Chen said.
Chi Mei, which raised US$225 million last month selling bonds convertible into its shares, and local rivals such as Quanta Display Inc (
Chi Mei's shares have slumped since its Aug. 24 debut on the Taiwan stock exchange on concern a weak global economy will slow demand for flat panels used in notebook computers and televisions.
It said last September it planned to sell 500 million new shares at NT$40 apiece, 30 percent more than its March 21 closing price of NT$30.80, to invest in a plant. Morgan Stanley was hired to manage the sale.
Other flat-panel display makers have sold bonds instead of shares recently because of weak overseas demand for new shares.
Quanta Display, a venture owned by Japan's Sharp Corp and Taiwan's Quanta Computer Inc (
The bonds sold by Chi Mei last month mature in five years, don't pay interest, and can be converted into the display maker's stock at NT$31.61 apiece.
CMC Magnetics Corp (中環), Taiwan's second-largest maker of recordable compact discs, last week sold US$120 million of convertible bonds to overseas investors, according to J.P. Morgan Chase & Co, which underwrote the securities.
Tatung Co (
HannStar Display Corp (
Flat-panel display makers worldwide will raise their investment in manufacturing equipment by 24 percent to US$6.4 billion this year in a race to cut production costs and make larger TV-sized panels ahead of rivals, Austin, Texas-based DisplaySearch said earlier this month.
The market for flat-panels used in televisions grew more rapidly from the third quarter to fourth quarter last year than other segments such as notebook screens and desktop monitors, DisplaySearch said in an e-mail.
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