ProMOS Technologies Inc (茂德 科技), Taiwan's third-largest maker of computer memory chips, said yesterday that it did not plan to sell shares to private equity investors in the near term to finance the construction of a new plant, or for other purposes.
The Hsinchu-based company made the comment in response to speculation that it was in discussion with private equity investor groups including Kohlberg Kravis Roberts & Co (KKR) to offer shares as an attempt to brace for the increasing influence of United Microelectronics Corp (UMC, 聯電).
UMC, the world's No. 2 contract chipmaker, is the second-biggest shareholder of ProMOS, boosting its stake to 8.69 percent by buying shares on the open market since early last month.
"Private equity investor groups have been making share offers, eyeing ProMOS's growth potential, or attractive valuation. But we will stick to our plans to raise funds via bank loans and corporate bonds," ProMOS spokesman Ben Tseng (曾邦助) said in a telephone interview.
Tseng said ProMOS was arranging a NT$20 billion (US$607.8 million) syndicated loan and it planned to issue bonds early next year as part of its efforts to spend at least US$1.2 billion on equipment for a new plant.
Tseng said two or three private equity investor groups had proposed buying the chipmaker's shares before it issued new shares in the form of global depositary receipts (GDRs) in July, but ProMOS did not accept their offerings.
"We don't have plan to sell shares through GDRs until 2008 at the earliest, as we told investors during the [latest] road show," Tseng said.
The speculation about share sales to private equity funds comes amid growing interest among private investor groups around the world in taking over chipmakers.
KKR, Alplnvest and Silver Lake agreed last month to buy an 80.1 percent stake in the semiconductor unit of Philips Electronics NV for 3.4 billion euros (US$4.32 billion). KKR said it ended buyout talks with Freescale Semiconductor after it lost the bidding to a Blackstone Group-led consortium.
Tseng also refuted the idea that ProMOS wanted to arrange a large-scale share sale to private equity fund firms to fight a possible takeover bid by UMC. Even if UMC joins ProMOS' board, the company's strategy of building more cost-efficient 300mm plants will not change, he said.
UMC said it bought ProMOS shares to gain profits outside its core business of making chips for other companies.
ProMOS posted record high revenues last month of NT$6.1 billion with its gross margin rising to 40 percent.
ProMOS shares dropped 1.77 percent to NT$13.85 on the GRETAI yesterday, underperforming against the benchmark TAIEX's 0.01 percent loss.
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