Silicon wafer maker Globalwafers completed the first global depositary receipt offering from Taiwan in 19 months on Thursday, netting $469 million from an equity fundraising that was upsized by nearly 10% from the base offering.
Hsinchu-headquartered Globalwafers shrugged off market volatility to sell 68 million global depository shares to international investors, each of them equivalent to one common Globalwafers share.
The Reg S-only deal was executed amid political tensions across the Korean peninsula, which had put Taiwanese stocks under pressure since the beginning of the month. The Taiwan Stock Exchange Index has retreated 3.1% since the beginning of April following a long rally that stretched back to January last year.
Globalwafers’ GDR sale is the largest of its kind out of Taiwan in nearly four years, since Fubon Financial’s $850 million deal in July 2013. The new shares equate to 18.4% of the company’s existing share capital, implying a significant dilution to existing shareholders.
To minimise market risk, senior management of Globalwafers decided to move swiftly, launching the trade just four days after gaining approval from Taiwan’s Securities and Futures Commission on Monday, according to a source familiar with the situation.
Globalwafers has specified that the proceeds of the GDR sale will be used to pay down short-term loans it took on when acquiring US rival SunEdison Semiconductor. It announced the purchase of the Missouri-based company for $683 million in August last year — including taking over approximately $200 million of debt — and quickly wrapped up the acquisition four months later.
This clarity over the use of proceeds helped entice investors to subscribe for the new shares, particularly since Globalwafers has been nearly debt-free before the acquisition, the source told FinanceAsia.
Proceeds from the GDR sale are close to settlling the equity portion of the SunEdison Semiconductor acquisition. That should help the company substantially reduce its debt-to-equity ratio, which spiked from 4% before the acquisition to 173% as of the end of last year.
The deal was launched with a relatively wide discount range of 3% to 7% over Globalwafers’ NT$222.5 ($7.33) Thursday close, and was settled slightly below the mid-point at a 5.6% discount, or $6.9 per GDS.
The sale was well-received particularly among long-only investors and existing shareholders. Depsite the fact Globalwafers shares soared by nearly 50% after the acquisition, investors are confident not all synergies have yet been fully exploited, so the stock should have more upside.
That helped the company fully exercise its greenshoe option of 6 million shares, taking the total size of the deal to 68 million shares.
Final allocations were made to about 45 accounts, although nearly 80% of the shares on offer were given to the top 10 investors, with long-only funds taking about two-thirds of the deal.
Globalwafers CEO Doris Hsu said the GDR sale helped broaden the company’s investor base and improve its brand awareness in the international markets.
The company has emerged as the world’s third largest slicon wafer maker after buying SunEdison Semiconductor, but most of its registered investors remained Taiwanese funds and institutions before the new deal.
Nomura was the sole global coordinator of the GDR sale, and also a joint bookrunner with Citigroup.
