Powerchip Semiconductor Corporation (PSC) has revealed plans to downsize its capital by NT$34.38 billion (US$1.09 billion), or 38%, to NT$56.09 billion. ProMOS Technologies is also expected to follow suit.
PSC said that it sees no urgent need to undertake any fund-raising activities immediately after reducing its capital, as the company's core business has started generating profits. PSC has to bring its share prices back up to "reasonable" levels, and will then decide whether it should raise additional paid-in capital, according to the DRAM producer.
Before PSC's announcement, market sources had estimated the DRAM maker would slash its capital by at least 50% in order to boost the value of its shares to more than NT$10. But Eric Tang, spokesperson for PSC, had indicated that the company would minimize its capital reduction and limit the impact on its shareholders.
After the capital downsizing, PSC's net value per share will increase to NT$6.9. The value may rebound to above NT$10 at the end of the third quarter, as PSC's profitability for the first half is expected to be strong, according to industry sources.
PSC has reported unaudited net profits of NT$3.54 billion for the first quarter of 2010, up 121% from NT$1.6 billion posted in the prior quarter when the company saw its first profits in 11 quarters.
ProMOS is likely to also unveil a capital reduction plan, according to market sources. The DRAM maker may discuss plans to at least halve its current paid-in capital of NT$72.6 billion at its upcoming shareholders meeting in June.
ProMOS's shares rose 0.16% to close at NT$3.25 on the Taiwan Stock Exchange (TSE) on April 12.
Nanya Technology in June 2009 received approval to reduce its capital by 66.43% to NT$15.76 billion, allowing its net worth per share to exceed NT$10. Later in the month, Nanya carried out a private placement project raising additional capital of NT$12.22 billion.