AUO shares jump on American depositary receipt sale plan
February 20, 2013, 12:12 pm TWN
TAIPEI -- Shares of AU Optronics Corp. (AUO), one of Taiwan's leading flat panel makers, soared yesterday after the company announced a plan to issue new American depositary receipts (ADRs) to finance purchases of production materials, dealers said.
Many investors also hoped that AUO would benefit from a recovery in the long-depressed flat panel sector and see its share price rise ahead of the ADR sale, they said.
AUO gained 7 percent, the maximum daily increase, to close at NT$12.85.
"It has been a pattern in the market that a stock will rise after it announces a fund-raising plan so that it can set a satisfactory issuance price," Grand Cathay Securities analyst Mars Hsu said.
"AUO is benefiting from such a mentality, in particular, as the flat panel industry is recovering."
In a filing with the Taiwan Stock Exchange, AUO said it plans to issue 640 million to 800 million new shares to expand its current ADR program.
The announcement echoed AUO's statement at an investor conference on Feb. 6 that it might raise funds to expand operations to meet demand.
While AUO said the timing of the ADR plan will depend on market conditions, the market widely expects the new shares to go on sale no later than June.
"Although AUO said the funds to be raised from the ADR sale will be used to buy production materials, I think the company may use the money to pay down some of its debt to improve its financial structure," Hsu said.
According to AUO, the company had NT$54.11 billion in debt maturing within one year and an additional NT$169.02 billion in long-term debt as of the end of the fourth quarter of last year.