Singapore-based Chartered Semiconductor, the world's third largest contract chip maker, said it plans to raise $300 million through a rights issue to shore up its finances amid a deep industry downturn. The company, 59.43 per cent held by Singapore state investor Temasek - said it would offer existing shareholders 27 shares at S$0.07 apiece for every 10 shares held. Temasek will support the cash call by subscribing for up to 90 per cent of the share issue.
"The rights offering will strengthen the company's capital position, and provide Chartered with additional liquidity to manage its maturing indebtedness, fund planned and future capital expenditures," the Singapore firm said in a statement.
Chartered needs to maintain net worth above $1 billion and net leverage of less than 180 per cent to keep within loan covenants. CEO Chia Song Hwee said in January that the company will be focusing on making sure it doesn't come "anywhere close to breaching" those covenants.
The company reported a $114 million net loss for the fourth quarter, cut 600 jobs, and forecast a net loss of between $142 million and $152 million for the first quarter. Chartered had about $524 million in cash and cash equivalents as of 31 December and aims to end this year with about $400 million.
State-controlled Chartered ranks alongside China's Semiconductor Manufacturing International Corp in the market for custom-built microchips, which is dominated by larger rival Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp.
Deutsche Bank, Citigroup and Morgan Stanley are working with Chartered on the offering. Chartered's shares had been rising this year on speculation of a possible merger with its larger Taiwanese chipmakers, even though many analysts had described the move as unlikely. The shares had tumbled about 80 per cent last year.