Taiwan s banks mull loan to ailing ProMOS

February 16, 2009
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, TAIPEI, Feb 16 –  A consortium of banks is to decide Monday whether to extend a multi-billion Taiwan dollar loan to financially troubled memory chipmaker ProMOS Technologies Inc, a senior bank executive said.

The consortium led by state Bank of Taiwan, the island\’s largest lender by assets, is to discuss ProMOS\’s request Monday for a 5.0 billion Taiwan dollar (147 million US dollar) loan, an unnamed executive at one of the largest creditor banks told Dow Jones Newswires.

"There will definitely be a consensus today, and if banks agree to lend ProMOS the money, it will have to go back to get its board\’s approval," the executive said.

ProMOS, a maker of dynamic random access memory (DRAM) chips, needs the loan to meet the possible redemption of 330 million US dollars worth of overseas convertible bonds it issued in 2007.

It has posted almost two years of losses as chip prices tumble amid a supply glut.

Taiwanese authorities have said they want to aid the industry but not individual firms.

In the nine months to September, the island\’s four major DRAM makers jointly booked a record net loss of more than 90 billion Taiwan dollars, with a full-year loss surging to 120 billion Taiwan dollars, figures show.

Industry critics, however, oppose a government bailout of the local sector which they say is uncompetitive and too reliant on overseas companies who supply crucial advanced core technology.

ProMos first acquired production technology from Germany\’s Qimonda and since 2005 has used crucial production technologies from South Korea\’s Hynix.

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