Chartered updates guidance, sees improvements
Chartered Semiconductor updated its first-quarter earnings guidance this morning with what passes in this economy for good news. The company reported that since it's initial guidance statement on 30 January, there have been more wafers ordered for second-quarter shipment than the company originally anticipated.
By Ron Wilson, Executive Editor -- EDN, March 9, 2009
Singapore-based foundry Chartered Semiconductor updated its first-quarter earnings guidance this morning with what passes in this economy for good news. The company reported that since it's initial guidance statement on 30 January, there have been more wafers ordered for second-quarter shipment than the company originally anticipated. This increased wafer flow will reduce the amount of fixed expense allocated to each wafer, the company said, reducing unit cost and consequently improving the results for the quarter.
Chartered now says it expects a net loss of $127 million, plus or minus $5 million, on the quarter. This is improved from a projected $147 million loss in the 30 January estimate. Revenues, exclusive of Chartered's share in SMP, are still estimated to be near $238 million for the second quarter. The company did not state why, with greater than expected wafer orders for second-quarter delivery, they were not increasing their revenue guidance.
Separately, Chartered announced it's plan to raise $US 300 million by means of a 27-for-10 rights offering to existing shareholders. The offer, underwritten and lead by Citi, Deutsche Bank, and Morgan Stanley, will permit shareholders as of 5 pm Singapore or Eastern Daylight time, 18 March, 2009, to purchase additional shares or ADS certificates, respectively, for Singapore $0.07 or US$ 0.45 respectively each, a significant discount to the most recent closing prices.
Singapore Technologies Semiconductors Pte. Ltd., has signed up for its pro-rata 59.4 percent of the new shares, and has agreed to purchase up to 90 per cent of the offering if necessary. Company executives have also agreed to exercise their rights to purchase additional shares.
The company explained that while it feels its operating capital is sufficient for the next 12 months, it wishes to proactively increase its cash reserves and decrease its debt-to-equity ratio. As of 31 December, the company reports having had a cash balance of US$594.1 million, and unused credit facilities of just over US$1 billion, of which US$750 million is intended for facilitizing a new fab. The company at that point had US$1,840.5 million in debt and US$265.9 in outstanding convertible, redeemable preference shares.
After the offering, Chartered intends to propose to shareholders a ten-to-one consolidation of outstanding shares, both to reduce the fixed costs of administration and to reduce the risk of the price of its ADSs falling below the NASDAQ minimum of $1 per share.
