Microelectronics Technology Inc (MTI), the Taiwanese wireless communications product developer that claims to be the world’s largest Ka-band satellite transceiver manufacturer, is to undertake a capital reduction in order to order to offset its…
Microelectronics Technology Inc (MTI), the Taiwanese wireless communications product developer that claims to be the world’s largest Ka-band satellite transceiver manufacturer, is to undertake a capital reduction in order to order to offset its accumulated losses.
The MTI board is to hold an interim shareholder meeting to approve the plan of reducing the company’s capital by NT$1.439bn (US$49.1m) or 34.84%. It would do this by cancelling approximately 143.9 million shares.
Post-transaction MTI’s capital would be worth NT$2.691m (US$91.8m) and the book value per share would increase from NT$5.37 (US$0.18) to NT$8.24 (US$0.28).
In the first half of 2012, MTI made a net loss of around NT$528m (US$18m), or a NT$1.28 (US$0.44) loss per share, on sales of NT$4.19bn (US$143m).
The plan follows the completion of a NT$1.8bn (US$61.4m) private placement of mandatory convertible bonds to Chinese electronics giant Hon Hai in late September.
Under the terms of the financing, Hon Hai and its subsidiary CyberTAN Technology have subscribed to the entirety of the private placement (CyberTAN taking NT$1.6bn and Hon Hai NT$200m). The parties have also signed a strategic cooperation agreement.
The bonds are set be converted after the capital reduction has taken place and based on a conversion price per share of NT$13.81 would give Hon Hai approximately 130 million shares, representing 32.61% of the company.
Commenting on the private placement, MTI chairman Patrick Wang said, “In order to enhance MTI’s working capital and strengthen the company’s financial structure, we invited CyberTAN and Hon Hai to join MTI as our strategic partners.
Based on our strength in research & development and customer resources in microwave and satellite communications, MTI will be benefiting from Hon Hai’s excellent manufacturing capabilities and its dominant buying power, which will help us further improve our manufacturing efficiency and our cost structure. We expect to enlarge our business scale, improve operating performance, and increase our shareholders’ value.”
Hon Hai chairman Terry Gou added that the combination would collaborate closely on technology research, manufacturing and customer development in order to take advantage of the growing business opportunities from both 4G and satellite communications.
MTI has played a central role in the development of satellite broadband. The company entered into a Ku- and Ka-Band manufacturing partnership with ViaSat back in 2003 and has since delivered more than 1.5 million Ka-Band transceivers to the European and North American marketplaces.
