Eight state banks reached a consensus late last night to approve a NT$3 billion (US$87.6 million) loan to money-losing computer memory chipmaker ProMOS Technologies Inc (茂德科技), which is looking for funds to repay US$330 million in convertible bonds later this week. The loan still needs to be approved by each bank’s board.
The loan is less than the NT$5 billion ProMOS had applied for, as some banks fear the loan could become a bad debt if ProMOS failed despite their help.
“The eight lenders with government stakes agreed last night to grant ProMOS NT$3 billion in a syndicated loan,” the banks said in a brief statement.
The approval came after banks led by the Bank of Taiwan (臺灣銀行) had been engaged in discussions all day to iron out disagreement between the banks and ProMOS over the necessity of the loan and its terms. Bank of Taiwan chairwoman Susan Chang (張秀蓮) had said earlier yesterday that “ProMOS will not be able to meet its [payment] deadline if the banks fail to reach a conclusion on the matter today.”
The late-night breakthrough did help ProMOS avoid the risk of imminent insolvency if it defaults on the five-year bonds next Tuesday, which would cause a ripple effect of defaults on all its bank loans, as creditors could demand that the Hsinchu-based firm repay the debts in the short term.
Holders of ProMOS’ convertible bonds will today begin to place a put option on the debt, which would allow them to sell the bonds back to the chipmaker.
“We will use the bank loans to repay ProMOS bondholders,” ProMOS spokesman Ben Tseng (曾邦助) said last night.
Tseng said Citibank would represent ProMOS in negotiations with the bondholders to determine a proper price for debt redemption. He declined to reveal the size of the discount on the bonds the company plans to propose to its investors.
“The only reason [for the approval] is that credit banks hope to take more debts back once ProMOS’ operations get back on track, helped by the government’s bailout plan,” Kenneth Lee (李克揚), a semiconductor analyst with Primasia Securities Co, told the Taipei Times yesterday.
In other words, ProMOS could be part of the government’s greater efforts to rescue the nation’s DRAM industry, Lee said.
In the severest industrial slump since last year, ProMOS lost NT$22.46 billion in the first three quarters of last year and NT$7.32 billion in 2007 as chip prices collapsed as a result of a supply glut.
ProMOS had borrowed NT$63.7 billion in syndicated loans from 2003 to 2007, mostly from the nation’s state-controlled banks, including the Bank of Taiwan and Taiwan Cooperative Bank (合作金庫銀行), the chipmaker’s filings to the Taiwan Stock Exchange show.
As of the end of the third quarter of last year, ProMOS had an aggregate of NT$89.52 billion in debts, including NT$42.66 billion in long-term debt.
Minister of Economic Affairs Yiin Chii-ming (尹啟銘) said on Friday that he expected banks to approve the loan because ProMOS had provided enough collateral for the loan, despite concerns that it might waste taxpayers’ money.
President Ma Ying-jeou (馬英九) said earlier the government had to rescue the DRAM industry because it represents an important industry employing many people in Taiwan. Democratic Progressive Party Chairwoman Tsai Ing-wen (蔡英文), however, has cautioned against attempts to rescue ProMOS.
The CIA has a message for Chinese government officials worried about their place in Chinese President Xi Jinping’s (習近平) government: Come work with us. The agency released two Mandarin-language videos on social media on Thursday inviting disgruntled officials to contact the CIA. The recruitment videos posted on YouTube and X racked up more than 5 million views combined in their first day. The outreach comes as CIA Director John Ratcliffe has vowed to boost the agency’s use of intelligence from human sources and its focus on China, which has recently targeted US officials with its own espionage operations. The videos are “aimed at
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
SHIFT: Taiwan’s better-than-expected first-quarter GDP and signs of weakness in the US have driven global capital back to emerging markets, the central bank head said The central bank yesterday blamed market speculation for the steep rise in the local currency, and urged exporters and financial institutions to stay calm and stop panic sell-offs to avoid hurting their own profitability. The nation’s top monetary policymaker said that it would step in, if necessary, to maintain order and stability in the foreign exchange market. The remarks came as the NT dollar yesterday closed up NT$0.919 to NT$30.145 against the US dollar in Taipei trading, after rising as high as NT$29.59 in intraday trading. The local currency has surged 5.85 percent against the greenback over the past two sessions, central
RSS