Elpida Memory Inc, Japan’s biggest computer-memory chipmaker, cut the scale of a proposed share sale after the stock tumbled more than 20 percent in two weeks.
The chipmaker may raise as much as ¥60.1 billion (US$663 million), after fee payments, selling 55 million new shares, according to a filing yesterday with Japan’s finance ministry. That’s about 23 percent lower than the ¥78.5 billion that Elpida said it may raise in a Sept. 1 disclosure. Excluding fees, the sale may total ¥63.4 billion, or ¥1,152 a share, it said.
“The company announced plans for financing prior to deciding on the price, a sure way to drive down shares,” said Haruo Sato, an analyst at Tokai Tokyo Securities Co, who has an “above average” rating on the stock. “The price announced today is still better than what you would expect after calculating possible dilution.”
Elpida declined 5.9 percent to close at ¥1,200 on the Tokyo Stock Exchange prior to the announcement. The benchmark Nikkei 225 Stock Average lost 2.3 percent. The stock has tumbled 22 percent since the Sept. 1 statement.
Tokyo-based Elpida said in June it may receive ¥160 billion in aid from the government, its Taiwanese partner and financial institutions after falling semiconductor prices drove it to a record loss last year.
The chipmaker said last month it would sell ¥30 billion in shares to state-run Development Bank of Japan. Taiwan Memory Co (TMC, 台灣創新記憶體公司), 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, Elpida said in June.
The share sale is in addition to those fundraising measures, Elpida spokesman Hiroshi Tsuboi said on Sept. 1.
Elpida, which does not provide annual earnings outlooks, 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.
The price of the benchmark 1 gigabit dynamic random access memory (DRAM) has more than doubled this year as industry-wide production cuts helped ease a glut that drove chipmakers to record losses last year. The price tumbled 62 percent to record lows last year, Taipei-based DRAMeXchange Technology Inc said.
“Rising prices of DRAM are really saving the company,” Sato said. “This round of financing is aimed at capital spending needs, which, market conditions permitting, could considerably expand Elpida’s business.”
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