ProMOS Technologies Inc’s (茂德科技) board has approved a share restructuring package, which would include an 85 percent cut in the number of the chipmakers’ shares as well as the sale of 3.5 billion new shares, according the firm’s filing with the Taiwan Stock Exchange yesterday.
The radical move is aimed at repaying the financially-troubled PC DRAM maker’s towering debts and to facilitate the introduction of a strategic technology partner.
The decision came after the PC DRAM maker’s creditor banks agreed last week to prevent an immediate default by slashing the interest rate on NT$57 billion (US$1.98 billion) in syndicated loans to just 0.1 percent from 3.5 percent.
“We know there is bumpy road ahead, but we have to find a way out. The capital reduction and new share offerings will help restore ProMOS’ financial structure to a healthy level,” ProMOS spokesperson Ben Tseng (曾邦助) said by telephone.
However, ProMOS has no plans to seek protection from insolvency by filing a restructuring plan, chief financial executive Jessie Peng (彭卓蘭) told a media briefing yesterday.
The company does not intend to sell its 12-inch plant either, she added, dismissing recent speculation that ProMOS was in talks with local chipmaker Vanguard International Semiconductor Corp (世界先進) to sell the plant
“We hope this package will solicit support from our creditors and a future strategic partner,” Tseng said.
Tseng declined to comment on market speculations that Japanese memory chipmaker Elpida Memory Inc could top the short list of potential strategic partners. ProMOS currently supplies DRAM chips to Elpida in exchange for technological transfers from the Tokyo-based company.
“The strategic partner will not simply be a financial investor. The candidate must be able to help ProMOS develop technologies and new products,” he said.
ProMOS plans to sell 2 billion new shares to a strategic investor through a rights issue or private placement, the firm said in a filing with the Taiwan Stock Exchange. The price has not been set yet.
To pay back bank loans, ProMOS also plans to offer 1.5 billion new shares to its creditor banks led by Bank of Taiwan (台灣銀行).
If the creditor banks were to subscribe to the total offering, they would own a stake of nearly 40 percent in ProMOS, holding 3.88 billion shares after the completion of the restructuring package.
The latest capital reduction plan would reduce the chipmaker’s capital to NT$3.82 billion, the filing said.
The number of shares in ProMOS would also decrease 85 percent to 382 million, the statement said. It would be the firm’s second capital reduction program after a 65 percent downsize last year.
The company is scheduled to hold an extraordinary shareholders’ meeting on Aug. 26 to approve the financial restructuring program.
ProMOS’ quarterly losses narrowed to NT$4.26 billion in the first quarter of this year, compared with losses of NT$4.75 billion in the fourth quarter of last year.
ProMOS shares dropped 3.53 percent to NT$0.82 yesterday, snapping the stock’s four-day rally.
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