Taiwan-based DRAM maker Powerchip Semiconductor Corporation (PSC) will encourage holders of its US$133 million zero-coupon ECB (euro convertible bond) to convert their issues into PSC shares by offering cash compensation for the gap between the bond principal and the stock market value of shares, according to PSC.
The ECB will mature on February 2, 2010 and PSC has had Citigroup Global Markets deliver invitations to the ECB holders for the conversion, the company indicated.
Since the conversion price of NT$15.87 per PSC share is much higher than PSC's stock price of NT$4.91 per share on January 15, ECB holders are expected to be unwilling to convert their ECB holdings. Thus, PSC will offer cash to cover the gape between the conversion price and the market value of the shares to prevent the ECB holders making losses from the conversion, the company explained.
The deadline of the cash-compensated conversion is 3 pm London local time on January 28, and the reference stock price for computing cash compensation is the average of the closing stock prices from January 22 to January 28, PSC indicated.