Published April 10, 2009

Chartered expects to raise US$300m with good response to rights issue

By OH BOON PING

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CHIP foundry Chartered Semiconductor Manufacturing said yesterday its 27-for-10 rights issue drew an overwhelming response and it expects to raise about US$300 million net.

Big boost: Chartered said the rights issue would strengthen its capital position, improve its ability to manage maturing debt and fund future capital expenditure

At the close of the offer on April 6, 9.86 billion rights shares - including American Depositary Shares (ADS) - had been validly subscribed, it said.

This was in excess of the near 6.9 billion rights shares offered.

The rights shares, to be issued on April 15, were priced at seven cents apiece. Chartered's major shareholder Singapore Technologies Semiconductors, a wholly owned subsidiary of Temasek Holdings, undertook to subscribe to its pro rata entitlement of 59.4 per cent of the offer.

Chartered said yesterday the exercise would strengthen its capital position, improve its ability to manage maturing debt and fund future capital expenditure.

The rights offer will also improve its debt-to-equity ratio and help it pursue its long-term growth strategy, it said.

Early this year, Chartered said it expected further losses and was cutting 600 jobs after posting a quarterly loss as customers cut orders amid the global economic slowdown.

Ninety per cent or 540 of the jobs to be axed will be from Singapore.

Last month, Chartered guided for first-quarter 2009 turnover of US$238 million and a net loss of US$127 million. It previously reported a US$114 million Q4 2008 net loss, amid falling global demand for semiconductor chips.

Chartered's Q1 2009 results are expected to be released on April 24 before the local market opens.

Recently, Moody's Investors Service downgraded Chartered's unsecured bond rating to Ba2 from Ba1 and said it remains on review for a further downgrade.

Chartered ranks alongside China's Semiconductor Manufacturing International Corp in the market for custom-built microchips, which is dominated by larger rivals Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp.

Chartered's shares closed unchanged at 13.5 cents yesterday.