Rexchip Electronics, the Taiwan-based production subsidiary of Elpida Memory, has revealed plans to raise an additional paid-in capital of NT$6 billion (US$203 million) through issuing new shares. The new funds will be used to repay debts that are due soon, as well as financing company operations.

The planned fund raising has been approved by Rexchip's board of directors, subject to shareholder approval.

Rexchip's debts owed to creditor banks in Taiwan are estimated at more than NT$11.7 billion, of which NT$7.8 billion will have to be repaid in 2012. The firm also has around NT$6.3 billion worth of overseas debts coming up for repayment this year.

Kingston Technology is likely to have participate in the rights issue, since major shareholder Elpida is unable to provide financial aid, according to industry sources. The Japan-based firm has filed for bankruptcy protection.

Elpida currently holds a 60% stake in Rexchip, followed by Powerchip Technology with about 21% and Powertech Technology (PTI) with almost 9%.

In related news, Rexchip disclosed that it has signed a sales agreement with Adata Technology, a major DRAM module maker in Taiwan. Adata has agreed to pay Rexchip a total of US$45 million in advance for DRAM chips, while Rexchip will use equipment as collateral to ensure its supply to the module client.

Rexchip saw its February revenues decline 25.6% sequentially to NT$1.72 billion, affected by falling shipments to Elpida. Revenues amounted to NT$4.03 billion for the first two months of 2012, down 27.1% from a year ago.