Tue, Mar 25, 2003 page11

• Chi Mei pulls share sale

  NO TAKERS The flat-panel display maker had hired Morgan Stanley to manage the sale of US$575 million of new shares in the US before the invasion of Iraq

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  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 (陳彥松).

  "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 (廣輝電子) are investing in new factories and equipment to keep up with South Korea's Samsung Electronics and LG.Philips LCD Co, the world's two biggest makers of flat-panel displays.

  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 (廣達電腦), last week said it scrapped plans to sell NT$4.5 billion in new shares to finance a plant, citing unfavorable prospects.

  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 (大同), which makes computers and home appliances, on March 4 sold US$80 million of bonds convertible into shares in Chunghwa Picture Tubes Ltd (中華映管). Tatung holds a 30 percent stake in Chunghwa Picture, a rival of Chi Mei Optoelectronics.

  HannStar Display Corp (瀚宇彩晶), Taiwan's fourth-largest maker of flat-panel displays, last month sold US$150 million of bonds convertible into its shares, one-fifth more than first planned.

  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.

  For your information

  Going the bond route as stock sales flop

  * Last week, Quanta Display also scrapped a planned shares sale. * CMC Magnetics went another route and sold US$120 million in bonds. * Tatung sold bonds valued at US$80 million earlier this month. * HannStar sold convertible bonds valued at US$150 million last month.
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