Taiwan TFT-LCD makers to raise $5.2B in 2006

October 4, 2006 – Major Taiwanese manufacturers of thin-film transistor liquid-crystal displays (TFT-LCD) are expected to borrow roughly US $5.18 billion this year, to make up for a poor business climate suffered in 2Q, according to the Taiwan Economic News.

Nearly half of the funds came from two firms. AU Optronics Corp. (AUO) recently closed a syndicated bank loan worth about $1.68 billion, just before its merger with Quanta Display Inc. (QDI) — which itself raised $823 million earlier this summer also via syndicated bank loan. The report indicates that capital raised by the segment in 2H06 could top $3.03 billion, with all panel makers having fund-raising projects in the works.

The report, citing an unidentified senior financial executive of a local panel maker, noted that panel makers turn to syndicated bank loans to raise funds and keep their capitalizations from expanding. Currently, the debt ratios of Chi Mei Optoelectronics Corp. and AUO are a relatively high 55% and 50%, respectively (AUO would be 65% after its merger with QDI), due to concerns of excessive supplies.

Taiwan TFT-LCD makers’ capital-raising projects (2006)

Company………….Method…………………….Amount ($NT)*……………Date

AUO……………Syndicate bank loan…………55 billion………………September
QDI……………..Syndicate bank loan…………27 billion………………June
CMO……………Private raising………………….16.7 billion…………….May
CMO……………Syndicate bank loan………..60 billion………………March
CPT…………….ECB……………………………………8 billion………………July
HannStar…….Private corporate bond………1.5 billion…………….June
Innolux………..Cash capital increase………..8 billion………………October
TOTAL……………–………………………………..176.2 billion……………..–

* US$1 = NT$32.8
Source: Taiwan Economic News, company reports.

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