Elpida Memory Inc, Japan’s biggest computer memory-chip maker, fell the most in more than five months in Tokyo trading after the company said it plans to sell as much as ¥78.5 billion (US$845 million) of stock.
Elpida slumped 16 percent to close at ¥1,285 on the Tokyo Stock Exchange, the biggest decline since March 12. The benchmark Nikkei 225 Stock Average lost 2.4 percent.
The company will sell as many as 50 million new shares overseas for ¥71.4 billion and 5 million to domestic investors for ¥7.12 billion, Tokyo-based Elpida said in a statement on Tuesday. The issue, arranged by Morgan Stanley, Nomura Holdings Inc and Daiwa Securities Group Inc, would increase Elpida’s number of outstanding shares by 39 percent.
“This raises obvious concerns about share value dilution,” said Tsutomu Yamada, an analyst at Tokyo-based Kabu.com Securities Co. “The competitive landscape of the market is shrouded in uncertainty and it still remains to be seen whether Elpida can leverage the funds to rebuild itself.”
The proceeds will be spent on factories and equipment, Elpida said.
The chipmaker said on June 30 it may receive ¥160 billion in aid from the government, its Taiwanese partner Taiwan Memory Co (台灣創新記憶體公司) and financial institutions after falling semiconductor prices drove it to a record loss last year.
Elpida said last month it would sell ¥30 billion in shares to state-run Development Bank of Japan. Taiwan Memory, a chipmaker set up by the Taiwanese government that has a technology partnership with Elpida, plans to invest an additional ¥20 billion by March 31, while banks will lend the balance of funding needed, Elpida said in June.
The company, which doesn’t provide annual earnings outlook, last month reported its seventh straight quarterly deficit, citing falling prices of chips. The net loss expanded to ¥44.5 billion in the three months ended June 30, from ¥13.8 billion a year earlier, as sales slumped 34 percent to ¥72.6 billion.
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