The deal will be conducted through a global accelerated tender offer with one roadshow team going to Asia, the US and Europe. As yet there are no details as to the structure nor pricing of the deal, but given the raft of previous Taiwanese convertible issues that have come out this year, there is no shortage of structures to mimic.
Bankers close to the deal report that they want to keep the deal as simple as possible with “nothing too exotic which might put investors off”. Essentially, the convertible will be sold as an equity story. “If you think – as most of the market does – that semiconductor prices will rise in the second half of this year, then semiconductor stocks should shoot up,” says the banker. “If they do not then investors in the convertible market will have the protection of the bond floors. Either way, the convertible structure makes sense at this point in the cycle."
Powerchip Semiconductor is a relatively young company in the busy Taiwanese chip sector. Founded in 1994 and listed in 1998, the company has some high profile Taiwanese investors including Umax Group, Vanguard International Semiconductor, China Development Company and the Executive Yuan's Development Fund. Japanese investors include Mitsubishi Electric Corporation, Kanematsu and Nomura Securities. The company transfers Mitsubishi’s wafer processing, packaging and testing technology for foundry and non-foundry DRAM production.
Recent financial results for the company bode well for the transaction. In the first quarter of 2001 the company earned NT$383 million ($11 million), an 11% decline in net profit over the same period in 2000. However, over the same period, semiconductor prices have fallen 185%. The company attributes this robust profit performance to “capacity expansion, yield enhancement and product diversification”.
