Infineon falls 6% after E1bn bond issue
By Bertrand Benoit in Frankfurt
Published: January 8 2002 18:45 | Last Updated: January 8 2002 21:28
markets.ft.com
Shares in Infineon fell almost 6 per cent on Tuesday after the German semiconductor group issued a E1bn ($891m) convertible bond and Siemens, its former parent company, sold 40m Infineon shares in a block trade worth E1bn.
The separate, but closely co-ordinated, transactions had originally been scheduled for the end of last month but were postponed after news of the plan leaked out.
Analysts welcomed the moves, saying the convertible issue would give Infineon much-needed cash while the Siemens trade further reduced the engineering group's exposure to the volatile chip sector.
"Infineon does not have as solid a balance sheet as some competitors. We had expected them to be cash negative by this time next year," said Andrew Griffin, analyst at Merrill Lynch. "But there was no sense of urgency. They just grabbed the opportunity provided by a supportive market."
In September, the company brushed aside concerns about its liquidity, saying it had sufficient cash and credit lines - after a heavily discounted E1.5bn capital increase in July - not to raise funds in the following 12 months.
"We stick to that comment, but market conditions are favourable for convertible bonds now, with low interest rates and high share price volatility," said Katja Schlendorf, spokeswoman for Infineon.
Last year was marked by the steepest collapse in chip prices in living memory. D-Ram memory chips, which accounted for 90 per cent of Infineon's operating loss, led the fall. A study by Gartner Dataquest published this week showed capital spending in the sector had fallen by 29 per cent in 2001.
Infineon has seen its share price nearly double, however, since it reached a year-low of E12 on September 27, buoyed by the first signs of a modest but sustained increase in D-Ram prices.
The Infineon five-year bond was priced with a 4.25 per cent coupon - the bottom end of the pricing range - and a 45.5 per cent conversion premium over the E24.35 price set for the Siemens shares. People close to the transaction said demand for the bond had exceeded supply by 2.5 times.
The positive market reception underlined healthy demand for technology paper after France Telecom issued a well-received E1.52bn convertible bond in ST Microelectronics last month.
Shares in Infineon were off E1.54 to E24.58 in late Frankfurt trading on Tuesday.
Goldman Sachs acted as lead manager for the convertible issue and was sole book-runner for the block trade. |
