Elpida sells convertible bonds

Elpida is planning on selling $728 million worth of convertible bonds in a bid to repay debt and upgrade semiconductor-manufacturing equipment.

According to Bloomberg the five-year 0.5 percent bonds will be aimed at local private investors. The bonds will be sold at 102.5 percent of face value, and the conversion share price will be set between October 19 and 21 at a premium of 29 percent to 34 percent.

Holders will have an option to sell the notes back to the manufacturer at 100 percent of face value at the end of September in 2013. However Elpida also has the option of buying the notes back if its share price is 30 percent higher than the conversion price over 20 consecutive trading days after December 3 2012.

Elpida, which was bailed out last year, hopes that by selling on shares it will be able to create more chips. It is also considering buying shares of Taiwanese chipmakers, which it hopes will help it compete with chip giant Samsung. Currently the company spends around $10 billion a year on chip output, a cost many companies can’t afford to keep up with.

Elpida president Yukio Sakamoto said Powerchip Technology, ProMOS Technologies and Winbond Electronics are some of the possible companies the chipmaker may target.

He told Bloomberg that the company was looking to acquire stakes of 20 to 30 percent and  any deals could lead to takeovers. However, he added that there were currently no negotiations being discussed.

Sources added that the chipmaker is planning to set up an R&D centre in Taiwan.

Wu Ming-chi, director of the Department of Industrial Technology under the Ministry of Economic Affairs (MOEA) told Focus Taiwan that the company is likely to invest more than $100 million to establish the DRAM chip development centre.

Wu said he had held preliminary talks with  Elpida regarding the investment, but he added that the investment plan still needs more time to be finalised.