Advanced Semiconductor Engineering prices overseas bonds at 27% premium
Taiwan-based Advanced Semiconductor Engineering Inc. (ASE,
), the world’s largest integrated circuit packaging and testing services provider, announced late Thursday that it has prices its latest tranche of overseas convertible bonds at a 27 percent premium over the closing share price on the same day.
After the high premium in pricing news was released, shares of ASE outperformed the broader market Friday, to end up 0.81 percent at NT$43.30 (US$1.40) on the Taiwan Stock Exchange, where the weighted index closed down 0.14 percent.
The 2.75- year bonds worth US$200 million carrying a zero coupon rate were well received in the market and were six times oversubscribed so that ASE priced the tranche of the bonds at NT$54.55 in conversion price, which represented a 27 percent premium over Thursday’s closing price of NT$42.95.
Analysts said that the high premium in the bond pricing reflected investors’ optimism toward ASE’s earnings prospects as the company has taken the lead over its peers in high-end processes, such as the system-in-package technology.
ASE said that the bonds are scheduled to be issued and go listed in the Singapore stock exchange on July 3. The bonds will be matured on March 27, 2018.
The IC firm said that the proceeds from the bond sale will be used to pay for its purchases of production equipment overseas denominated in the U.S. dollar.
Market analysts said that ASE decided to issue the bonds at the moment because the U.S. Federal Reserve is expected to kick off an interest rate hike cycle later this year, which will boost fund-raising costs for enterprises.
ASE said that it will use the existing 120 million shares it purchased from the market under a share buyback program in March for the future conversion of the bonds for its shares.
The use of the shares bought under the repurchase program in- stead of issuance of new shares for conversion will not lead to an expansion in its paid-in capital and a dilution of its earnings per share, the company said.
In an annual general meeting held Tuesday, ASE Chief Operating Officer Tien Wu told the company’s shareholders that the IC firm is expected to see its sales growth momentum pick up from quarter to quarter in the second half of this year after inventory adjustments in the first half faced by the global IC industry.