Siliconware Precision Industries (SPIL) will hold a shareholders meeting on October 15, seeking approval for an increase in the company's authorized share capital and its planned share-swap agreement with Foxconn Electronics (Hon Hai Precision Industry), according to the semiconductor assembly and test services company.

SPIL disclosed it currently has 3.116 billion shares outstanding. The company is proposing to increase authorized shares from 3.6 billion units to five billion.

SPIL indicated it plans to issue 840.6 million new shares to Foxconn for their share-swap deal. SPIL also needs to reserve headroom of 245.8 million shares for the potential conversion of the US$400 million convertible bonds (CB) issued in 2014, the company added. As SPIL currently has no immediate plans to issue new shares except for the announced share exchange with Foxconn, the planned increase in its authorized shares would help satisfy the company's potential operational and funding needs.

In addition, SPIL is proposing to increase the limit on the investments in a single security from 20% of the company's net worth to 60%. This amendment would allow SPIL to "accommodate the announced share exchange with Hon Hai and allow headroom for potential operational and funding needs to support business growth," SPIL said. "The approval of these resolutions is vital to the formation of the strategic alliance with Hon Hai and long-term shareholder value creation."

"It is imperative for SPIL to proceed with the share exchange with Hon Hai at this juncture given that ASE has succeeded in acquiring 24.99% stake," SPIL continued.

SPIL and Foxconn have agreed that one Foxconn share will be exchanged for 2.34 SPIL shares in a deal that will allow Foxconn to hold 840.6 million SPIL shares accounting for a 21.24% stake in the company. While the deal is still requesting approval at SPIL's upcoming shareholders meeting, Advanced Semiconductor Engineering (ASE) has announced the acquisition of SPIL shares through a tender offer.

"While ASE has stated that the tender offer represents a purely financial investment and that it has no plans to intervene in SPIL's businesses, ASE's interest may not be fully aligned with those of other shareholders given its competitive position," SPIL noted. "Its 24.99% stake could grant ASE significant leverage and influence over the company."

SPIL has urged its shareholders to support the company's strategic alliance with Foxconn to pursue vertical integration and other business synergies.