DF,
Just a quick reply to your question. I found the following from the prospectus:
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The Company currently plans to acquire, or acquire rights to, a site no later than mid-1998, to initiate construction of the new facility during 1999 and to complete the physical plant during 2000. Following the completion of the physical plant, the Company must install equipment and perform necessary testing prior to commencing commercial production at the facility, a process which the Company anticipates
will take at least nine months. Accordingly, the Company believes the new facility will not begin commercial production prior to late 2001. This new fabrication facility will have room for additional equipment and manufacturing capacity. The Company estimates that the cost of the new wafer fabrication facility will be at least $60.0 million, of which approximately $25.0 million relates to the purchase of land and construction of the building and approximately $35.0 million relates to capital equipment purchases necessary to establish the initial manufacturing capacity of the facility. The Company currently anticipates that it will incur a significant portion of the expense
related to these capital equipment purchases prior to the end of 1999. The Company intends to fund approximately $15.0 million of the total estimated $60.0 million cost of the new facility with a portion of the proceeds of this offering. The balance of the cost of this facility will be funded through a combination of cash from operations and additional debt or equity financing.
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The construction of the new fab won't happen until 1999. Company has currently about 11 million in cash with the total asset around 30 million. To build the fab, the company will either use debt financing or issue more stocks. I think an equity financing through a secondary is probably the best. Assuming the stock will climb to $20 by the end of 1998, only about 2.5 million shares need to be issued, a minor dilution to the stock. If the stock price will be higher, then less shares need to be sold. So the important thing is this company needs to grow for the stock to appreciate. It seems like the case here as revenues from Gigabit Ethernet and Fibre Channel will grow substantially starting in 1998.
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From prospectus:
Substantial growth in the Internet, World Wide Web and cellular and facsimile communications, the emergence of new applications such as video conferencing and the growing demand for remote network access and higher speed, data intensive communication between local area networks have caused current network system infrastructures to become bandwidth constrained due to the increasing volume and complexity of data types transmitted. In order to meet these increased bandwidth demands, communications systems OEMs must utilize increasingly complex ICs, which account for a greater portion of the value- added proprietary content of these systems. This trend has created a significant opportunity for IC suppliers with mixed-signal and system-level expertise that are capable of designing solutions that enable the transmission of increasing volumes of complex data at increasingly higher speeds. Dataquest estimates that the worldwide SONET/SDH market for ICs was approximately $240 million in 1996 and will increase to approximately $700 million in 2000 and that the ATM market for ICs was approximately $130 million in 1996 and will increase to approximately $700 million in 2000. The Fibre Channel and Gigabit Ethernet markets for ICs were relatively small in 1996, and Dataquest estimates these combined markets will be approximately $300 million in 2000. |
