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STATS ChipPAC Proposes to Undertake Capital Reduction Exercise With the Intention to Effect a Proposed Aggregate Distribution of up to US$813 Million Cash to Shareholders
| Source: STATS ChipPAC
UNITED STATES--(Marketwire - January 10, 2008) - SINGAPORE - 01/10/2008 - STATS ChipPAC Ltd.
("STATS ChipPAC" or the "Company") (SGX-ST: STATSChP), a leading
independent semiconductor test and advanced packaging service provider,
today announced a proposed capital reduction exercise ("Capital
Reduction"), with the intention to effect a proposed payout of up to US$813
million (the "Cash Distribution") to shareholders of the Company
("Shareholders").
The Capital Reduction is subject to and conditional upon adequate debt
financing being obtained to fund the Cash Distribution and the repayment of
certain outstanding debt of the Company (including the redemption and/or
repurchase of its senior notes), on terms and conditions acceptable to the
Company. The amount of the Cash Distribution would accordingly be
determined based on the proceeds of such debt financing made available to
the Company. The Capital Reduction is also subject to approvals by the
Singapore Exchange Securities Trading Limited ("SGX-ST"), and applicable
regulatory authorities, as well as of Shareholders at an extraordinary
general meeting of Shareholders ("EGM") to be convened to seek
Shareholders' approval of the proposed Capital Reduction. Approval from the
Singapore High Court is also needed for the Capital Reduction.
The Board of Directors may however decide, even if these conditions have
been satisfied, that it is then not in the best interests of the Company to
effect the Cash Distribution (due to the then prevailing market or economic
conditions or for any other reason) in which event the Company would take
all necessary steps and action to terminate the Capital Reduction exercise.
There is therefore currently no assurance that the Capital Reduction will
be effected and if effected, on the amount of the Cash Distribution and the
Capital Amount (as defined below).
If the Company determines that these conditions have been satisfied and
it decides to proceed to lodge a copy of the Order of Court approving the
Capital Reduction with the Registrar of Companies and Businesses of
Singapore, the Company would then make the lodgment, whereupon the Capital
Reduction would become effective and the Cash Distribution would become
payable. If the Capital Reduction becomes effective, the Company will
promptly make an announcement of the effectiveness of the Capital
Reduction, the Books Closure Date (as defined below), the amount of the
Cash Distribution, the Capital Amount (as defined below) and the date of
payment of the Cash Distribution in due course.
If the Capital Reduction is effected, Shareholders would receive a fixed
amount for each STATS ChipPAC ordinary share (including ordinary shares
represented by American Depositary Shares, each of which represents ten
ordinary shares) ("Share") held as at a books closure date ("Books Closure
Date") to be determined by the Directors of the Company (the "Capital
Amount"). The Capital Amount would be determined by dividing the amount of
the Cash Distribution by the number of issued Shares as at the Books
Closure Date.
The Capital Reduction, if effected, would not result in a cancellation of
Shares or a change in the number of Shares, held by Shareholders
immediately after the Capital Reduction.
The Capital Reduction, if effected, would allow the Company to return
surplus capital to the Shareholders. Giving proforma effect to the Capital
Reduction as at 30 September 2007, and assuming the Cash Distribution is
US$813 million, as well as the full conversion into Shares of US$134.5
million of 2.5% Convertible Subordinated Notes due 2008 held by Temasek
Holdings (Private) Limited ("Temasek") indirectly through its wholly-owned
subsidiary Singapore Technologies Semiconductors Pte Ltd ("STSPL"), the
Capital Reduction will reduce the share capital of the Company as at 30
September 2007 from approximately US$1,889 million to approximately
US$1,211 million.
After the Capital Reduction, the Company's financial position is expected
to remain healthy and the Company believes the continued cash flow
generated from its operations and financial resources are expected to be
able to support its foreseeable near-term investment and operational needs.
As previously announced on December 12, 2007, Temasek and STSPL have been
in discussions with the Company on the Capital Reduction. The Company
expects Temasek, through STSPL, to vote in favor of the Capital Reduction
at the EGM.
Further, also as announced on December 12, 2007, the Company postponed the
termination of its American Depositary Receipts ("ADR") program with
Citibank, N.A., the depositary for the American Depositary Shares (the
"ADSs" and the depositary, the "Depositary"), until it could eliminate its
outstanding obligations to deliver ADSs under its employee benefit plans.
In light of the Capital Reduction exercise, the Company has decided to
continue to maintain its ADR program with the Depositary until the Capital
Reduction exercise is consummated or abandoned. Once it completes or
abandons the Capital Reduction exercise, the Company will make its
determination as to whether any obligations to deliver ADSs under its
employee benefit plans remain outstanding and whether to proceed to
terminate the ADR program given such outstanding obligations at that time.
About STATS ChipPAC Ltd.
STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (SGX-ST: STATSChP) is
a leading service provider of semiconductor packaging design, assembly,
test and distribution solutions in diverse end market applications
including communications, digital consumer and computing. With global
headquarters in Singapore, STATS ChipPAC has design, research and
development, manufacturing or customer support offices in 10 different
countries. STATS ChipPAC is listed on the Singapore Exchange Securities
Trading Limited (SGX-ST). Further information is available at
www.statschippac.com. Information contained in this website does not
constitute a part of this release.
Certain statements in this release, including statements regarding the
proposed Capital Reduction and Cash Distribution, the proposed debt
financing, STSPL's expected voting position at the EGM, expected future
financial position, cash flow generated from operations, financial
resources and investment and operational needs, are forward-looking
statements that involve a number of risks and uncertainties that could
cause actual events or results to differ materially from those described in
this release. Factors that could cause actual results to differ from our
expectations include, but are not limited to, our ability to obtain debt
financing to fund the Cash Distribution and repay certain outstanding
indebtedness (including redeeming and/or repurchasing our senior notes) on
terms and conditions acceptable to us, obtaining requisite approvals needed
for the Capital Reduction, general business and economic conditions and the
state of the semiconductor industry; level of competition; demand for
end-use applications products such as communications equipment and personal
computers; decisions by customers to discontinue outsourcing of test and
packaging services; reliance on a small group of principal customers;
continued success in technological innovations; availability of financing;
pricing pressures including declines in average selling prices; the ability
to meet the applicable requirements for the termination of registration
under the U.S. Securities Exchange Act of 1934, as amended; ability to meet
specific conditions imposed for the continued listing or delisting of the
Company's securities on the SGX-ST; our substantial level of indebtedness;
potential impairment charges; adverse tax and other financial consequences
if the South Korean taxing authorities do not agree with our interpretation
of the applicable tax laws; ability to develop and protect our intellectual
property; rescheduling or canceling of customer orders; changes in products
mix; intellectual property rights disputes and litigation; capacity
utilization; delays in acquiring or installing new equipment; limitations
imposed by our financing arrangements which may limit our ability to
maintain and grow our business; changes in customer order patterns;
shortages in supply of key components; disruption of our operations; loss
of key management or other personnel; defects or malfunctions in our
testing equipment or packages; changes in environmental laws and
regulations; exchange rate fluctuations; regulatory approvals for further
investments in our subsidiaries; significant ownership by Temasek that may
result in conflicting interests with Temasek and our affiliates;
unsuccessful acquisitions and investments in other companies and
businesses; our ability to continue to successfully integrate the
operations of the former separate STATS and ChipPAC companies and their
employees; labor union problems in South Korea; uncertainties of conducting
business in China; natural calamities and disasters, including outbreaks of
epidemics and communicable diseases; and other risks described from time to
time in the Company's SEC filings, including its annual report on Form 20-F
dated March 12, 2007. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.