THE KOREAN parent firm of Clark-based Phoenix Semiconductor Philippines Corp. (PSPC) has raised $116.3 million in fresh working capital, seen reducing risk of any liquidity crunch cascading to the Philippine manufacturing unit.
The liquidity pressures earlier cropped out after an investee company of PSPC’s parent company STS Semiconductor & Telecommunications Co. Ltd. defaulted on debts and went into corporate rehabilitation. As STS guaranteed the debt of such debt-strapped affiliate, it likewise had to seek debt restructuring from its own creditors.
STS, which is listed on the Korea Exchange, is now getting fresh infusion from a new investor, SFA Inc., which agreed to subscribe to its convertible bonds, bonds with warranty and new capital shares from its unsubscribed capital stock.
“The financial commitment will serve to support the operational infrastructure of the company as it faces continued growth prospects,” PSPC told the Philippine Stock Exchange on Monday.
The new investor SFA agreed to buy $25.9 million worth of STS convertible bonds, $26.16 million worth of STS bonds with warranty and $64.27 million worth of new STS shares. Proceeds are scheduled to be remitted to STS by next month.
“STS and its Pampanga-based subsidiary, PSPC, continue to see positive growth with the capital infusion following a recent commitment from Samsung Electronics Co., Ltd. of continued business transactions with the company,” the disclosure said.
PSPC runs one of the largest outsourced assembly and test facilities in the region and has long been the preferred supplier of this global electronics giant.
STS went into its own voluntary credit administration program after an affiliate company defaulted on debts and filed for court-assisted rehabilitation. This debt-strapped affiliate BKE&T Co. Ltd. – an outsourced contract manufacturer of LCD front panels for smart and cellular phones – suffered losses from the sudden market drop for the products of its main customer, Nokia, in the global market.
The Korean parent firm of PSPC only has a minority equity interest in BKE&T, which filed for a court-assisted process rehabilitation at the Suwon Regional Court, but it was the guarantor of the latter’s debt.
PSPC management has repeatedly affirmed that this development at the parent company would not affect in any way its operations and financial condition.
One of the country’s largest electronics products exporters, PSPC registered $2.89 billion in sales of flash memory chips and memory modules in 2014. It had gross operating revenues of $59.80 million and earned net income after tax of $5.3 million in the first three months of 2015, an increase of 15 percent and 26 percent, respectively, over the same period last year.