By NISHA RAMCHANDANI
CHIPS packaging and testing firm Stats ChipPAC plans to offer senior notes due 2015 via a private placement to partly fund a proposed capital reduction and cash distribution exercise of up to US$600 million to shareholders.
The 83 per cent Temasek Holdings owned company also posted Q2 net income of US$37.3 million compared to US$2.2 million a year ago, it said late on Friday.
Stats ChipPAC has received approval in-principle from the Singapore Exchange for the listing and quotation of the new notes, which will pay interest semi-annually.
In the event the private placement of the new notes is not completed for any reason, the company will not proceed with the proposed capital reduction and cash distribution, it said.
The company also announced that it has commenced a cash tender offer for its US$213 million of 6.75 per cent senior notes due 2011. In conjunction with the tender offer, it is soliciting consents of holders of the existing notes to 'adopt proposed amendments to the indenture governing the notes that would eliminate or modify all of the restrictive covenants, certain reporting obligations, certain events of default and certain other provisions', it said.
It plans to fund the tender offer and consent solicitation through a combination of additional borrowings under a US$360 million senior credit facility which it entered into in May, part of the proceeds from the new notes and cash in hand. As at July 30, US$210 million remained available for drawdown under the credit facility.
The tender offer will expire at 5 pm (New York City time) on Aug 27, unless extended or earlier terminated.
For the second quarter ended June 27, 2010, net income rose to US$37.3 million, versus US$2.2 million a year ago and US$27.5 million in the prior quarter. For the first half of 2010, net income was US$64.8 million against a US$48.9 million loss a year ago.
Revenue for the quarter increased by 35.7 per cent to US$435.3 million compared to 2Q09, on the back of strong demand across all segments.
'As a result of higher savings from cost reduction effort and richer product mix, profitability for the quarter significantly improved over corresponding quarter a year ago,' said president and chief executive officer Tan Lay Koon.
The counter closed unchanged at $1.15 at the end of trading on Friday.
