ProMOS starts deeply discounted tender for convertibles

New York, Feb. 19 - ProMOS Technologies, Inc. announced a cash tender offer at a substantial discount to par for its zero-coupon convertible bonds due 2012.

The company is offering up to $265 per $1,000 principal amount for the securities.

Holders who tender by the expiration date of 9 a.m. ET on March 21 will receive $100 per $1,000 principal amount.

An extra $100 per $1,000 will be paid to those who tender by the early tender deadline of 9 a.m. ET on March 2 for a total of $200 per $1,000.

ProMOS will also pay to holders who tender by the early deadline a success premium of $30 per $1,000 principal amount if the success rate is 82% or $65 per $1,000 for a success rate of 86%. The success rate is defined as the percentage of bonds either tendered or remaining outstanding and not put back to the company under a new put option.

The company's new lenders, a syndicate led by Bank of Taiwan, own $40 million of the bonds and have indicated that they will not tender and will voluntarily revoke their right to exercise the new put option. Their holdings, 11.9% of the total outstanding, will not count towards the success rate.

The new put option gives bondholders the right to put the bonds back at par on May 29 if the tender does not close by April 17.

To be completed, the tender requires that 79% of the outstanding bonds be either tendered or remain outstanding with the new put option not exercised.

By tendering, holders will be deemed to have revoked the right to put the bonds on Feb. 14. ProMOS said 97.4% of the bonds have been put.

Citigroup Global Markets Inc. is the dealer manager (call Pamela Yeung +852 2501 2695 or Timothy Wee +852 2501 2134 or email promos.tender.offer@citi.com).

Announcement of the tender follows redemption requests from holders for $326.916 million of the $335.615 million of the convertibles currently outstanding.

Funding for the tender will come from a new NT$3 billion syndicated loan facility arranged by Bank of Taiwan and secured against assets with a book value of NT$15 billion.

In its press release announcing the planned tender, ProMOS said it has suffered declining revenue and cash flow due to "adverse macroeconomic factors and highly challenging conditions in the global DRAM industry."

Sales were down 36% in the 12 months to Dec. 31, 2008 versus the same period in 2007 and ProMOS recorded an operating loss of NT$24.5 billion versus NT$6.2 billion in the year-earlier period.

Cash was NT$0.2 billion at Jan. 31.

ProMOS commented that it "has exhausted all possible options to secure the required funding to meet the redemption obligation" on its convertibles. It added that it has looked at selling equipment, obtaining additional secured loans and legal means.

ProMOS is a Hsin-chu, Taiwan-based chipmaker.

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