Buyout talk boosts shares in CR Microelectronics
Shares of China Resources Microelectronics soared as much as 30 per cent to close at 43.5 HK cents yesterday after the mainland semiconductor company said its controlling shareholder, China Resources Holdings, may make a buyout offer of at least 48 HK cents a share.
The stock resumed trading yesterday after being suspended on June 28 following the company's announcement that CR Holdings was considering a privatisation proposal.
The HK$0.48 per share represents a premium of 43 per cent compared to the company's closing price on June 27 of HK$0.33. The offer price would still represent a 10 per cent premium over yesterday's close.
CR Holdings holds 60.6 per cent of its Hong Kong-listed subsidiary.
CR Microelectronics said in its statement that its bank loans were coming due and Beijing's credit-tightening policies were likely to create a challenge for the company in renewing its existing credit facilities.
Even if it is able to obtain financing, the costs will 'inevitably be much higher than the existing rate and may not be commercially viable' to the company. CR Microelectronics also said it was in need of additional capital to finance the operations of the loss-making 8-inch wafer fabrication facility, jointly owned by CR Holdings and itself.
If the privatisation proposal can not be implemented, the company will carry out a fundraising in the form of a rights issue or an open offer in order to repay its bank loans, and use the capital for future development and the fabrication business.
CR Microelectronics said there was no certainty that the privatisation would materialise, but if it proceeded the company would send out an offer document to shareholders shortly after the publication of its forthcoming interim report for the six months ending June 30.
Its annual report last year revealed the company's turnover rose 27.6 per cent to HK$3.9 billion while net profit rose 258 per cent to HK$272 million, a turnaround from the sluggish performance in the semiconductor market in 2008 and 2009.
The stock has fallen 23 per cent since the middle of May.
World Semiconductor Trade Statistics, a non-profit organisation of 64 semiconductor companies representing more than 75 per cent of the world semiconductor market, said the industry would see moderate growth in the next couple of years.
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