Jul 13, 2001
Infineon, Europe's second largest semiconductor maker behind Franco-Italian STMicroelectronics, said the issue was 3.8 times oversubscribed, with institutional investors in Britain, Germany and the United States taking up almost the whole offering.
The company said it would use net proceeds from the issue of 1.271 billion euros to fund capital investment and potential acquisitions as well as repaying short-term debt.
Infineon was looking to sell up to 60 million shares to raise fresh capital after a collapse in prices for computer memory chips squeezed its cash flow into the red, threatening its ability to fund new investment.
The issue includes a greenshoe option of 7.8 million shares, which will lift the volume of the issue to 1.5 billion euros if, as expected, it is exercised.
CASH NEEDED TO FUND PLANT
Infineon Chief Executive Ulrich Schumacher said last week he expected the issue, launched during one of the worst slumps the industry has seen, to be sold at about 27 euros per share, which would have raised about 1.6 billion euros. However the final total was still above some estimates earlier this week.
The German chipmaker's share price has collapsed over the past month, slumping more than 36 percent since the company warned it would make a third quarter loss of up to 600 million euros. Infineon urgently needs the money from the issue to fund investment, notably in a new 300 mm wafer plant in the German city of Dresden.
The plant is one of the first to produce 300 mm wafers, which are one third larger than standard wafers and allow chips to be produced more cheaply. Infineon expects the plant to strengthen its competitive position once the sector recovers.
Infineon has also said it could use the funds for possible acquisitions and for repaying short-term debt.
After a boom year in 2000, an abrupt slowdown in global sales of computer and telecoms equipment has led to a rapid build up of component inventories, leaving semiconductor makers struggling to sell new chips.
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