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Nanya Technology plans 90% cut in paid-in capital

Nanya Technology plans 90% cut in paid-in capital

Taipei, March 16 (CNA) Nanya Technology Corp., one of Taiwan's leading dynamic random access memory (DRAM) chip suppliers, plans to cut its paid-in capital by 90 percent, making the plan the largest-ever capital reduction in the local bourse. Under the plan, Nanya Technology will cut its paid-in capital by NT$215.65 billion (US$7.12 billion), or about 90 percent of the current NT$239.61 billion, to NT$23.96 billion. In a board meeting held Friday, Nanya Technology's directors approved the plan, which aimed to improve the DRAM maker's financial structure. As of the end of December, Nanya Technology's accumulated losses had reached about NT$233.08 billion. According to Nanya Technology, which is one of the DRAM manufacturing arms of conglomerate Formosa Plastics Group, after the cut, its accumulated losses are expected to fall to NT$17.43 billion. The memory chip producer said as long as the company continues to post profits over the next two years at a similar pace seen last year, it is possible for Nanya Technology to cut its accumulated losses to zero then. In 2013, Nanya Technology posted NT$8.17 billion in net profit or NT$0.34 in earnings per share, improving from 2012's NT$36.03 billion in net loss or NT$2.24 in loss per share as the global DRAM business hit a turning point with several of the major firms in the world cutting their production to combat a supply glut. The capital reduction speculation surfaced in the local media in early March, which had sent shares of Nanya Technology into a tailspin as many investors had thought that the plan showed the company's lack of confidence in the business. Nanya Technology said, however, the capital cut is expected to boost its book value per share to above NT$5 from NT$0.41 recorded as of the end of 2013, helping its shares emerge from the full-delivery stock category in the first quarter of next year at the earliest. Full delivery stocks are those belonging to companies facing financial difficulties. They cannot be traded on margin by investors, therefore reducing interest in the stock. The capital reduction plan is pending approval from the company's shareholders in an annual general meeting scheduled for June 6. If approved, the plan is expected to be completed in the third quarter of this year, Nanya Technology said. Meanwhile, Nanya Technology has agreed to sell an eight-inch wafer plant which is operated by its unit Sumpro Electronics Corp., to Taiwan-based contract chip maker Vanguard International Semiconductor Corp. for NT$2.18 billion. The deal is scheduled to be closed on July 1. Nanya Technology said it will book a loss of NT$600 million to NT$700 million in the first quarter of this year due to the disposal of the eight-inch wafer plant. Vanguard has promised not to lay off the plant's employees and to continue to provide services to existing customers. (By Jackson Chang and Frances Huang)


Updated : 2021-06-19 21:30 GMT+08:00