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Chimei Innolux to reschedule NT$200 bil. in loans

Chimei Innolux Corp. (CMI,奇美電子), a leading local maker of TFT-LCD panels, yesterday won an official agreement from a lending consortium to reschedule the repayment of syndicated loans of up to NT$200 billion, with the loans to be paid out within five years, Chen Yen-song, chief finance officer of the firm, said at a press conference held yesterday.

Chen said that following six months of negotiations between both sides, all the member banks of the lending consortium have agreed to provide CMI with a better business climate to help the firm create more benefits for its shareholders.

The banking consortium agreed to integrate several syndicated loans lent in the past and set a five-year repayment schedule for the NT$200 billion in loans, Chen said.

Based on the agreement, CMI will repay NT$16 billion by the end of this year, and repayments will be boosted to at least NT$30 billion in 2013, with the remainder to be paid out by the end of 2016.

With the eased repayment pressure, CMI will have NT$40-45 billion in short-to-medium term credit lines to finance its operations, according to Chen.

He also noted that CMI is scheduled to issue new shares of capital of NT$20 billion in the third quarter of the year, NT$20 billion in 2013, and NT$10 billion in 2014 — a total capital increase of NT$50 billion within three years.

Although CMI will face a markup on interest rates for the syndicated loans in the repayment reschedule program, Chen said the new interest rate is still lower than the rates for funds raised abroad, adding that the interest markup is quite reasonable and is needed to properly reflect the operational risk of banks.

At the press conference, Chen also cited remarks by CMI Chairman Duan Xingjian as saying that the repayment reschedule agreement has indicated the banking consortium's recognition and support for the firm's efforts to upgrade the local TFT-LCD industry, and its future business deployments.

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