Chimei Innolux Corp., Taiwan's leading LCD panel maker, will enter a new era with the Hon Hai Group dominating its operations, local media reports said Wednesday.
Three Chimei Innolux board members representing the company's biggest stakeholder Chi Mei Corp. tendered their resignations Tuesday in an apparent effort to give more leeway to the current management team to steer the company through its financial woes and the current global market slump, the reports said.
The resignation of the trio -- board director Lin Ching-sheng and supervisors Lin Jung-chun and Sung Kung-fu -- came two months after Tuan Hsing-chien from the Hon Hai Group took over as chairman of the flat panel maker.
Market analysts generally hailed the latest shake-up, saying Chi Mei Corp.'s retreat from the money-losing company's management will help reduce internal policy rifts and consequently enhance operational efficiency.
They also forecast that Chimei Innolux will become the main display panel supplier to the Hon Hai Group, which owns China-based Foxconn Technology Group -- the world's biggest electronics manufacturing services provider.
Industry insiders said Chimei Innolux's future development could bring major changes in the LCD panel industry, in which South Korean electronics conglomerates LG Display and Samsung Electronics now play dominant roles.
The following are excerpts from local media coverage of the possible impact of Chimei Innolux's personnel reshuffle:
Chimei Innolux is scheduled to elect new members to fill the board vacancies during its annual shareholders meeting on June 29.
Key members of a bank consortium that provided a syndicated bailout loan of NT$240 billion (US$8.14 billion) to Chimei Innolux said Tuesday they were shocked by Chi Mei Corp.'s retreat from the struggling flat panel company.
One of the conditions for the bailout loan was that Chimei Innolux would increase its capital by NT$50 billion in three stages by the end of 2014, sources close to creditor banks said.
Executives of Chimei Innolux and representatives of its two leading shareholders -- Chi Mei Corp. and Hon Hai Group -- were required to sign the bailout agreement, the sources said.
If either of the two largest shareholders back out of their commitment, the consortium will suspend its financial support of Chimei Innolux, the sources said.
According to the syndicated loan deal, Chimei Innolux must raise NT$20 billion on its own by September in the first phase of the three-phase recapitalization plan.
Whether Chi Mei Corp. keeps its promise to help Chimei Innolux raise NT$20 billion by September will be the first test of whether the bailout loan will remain in place.
At the same time that it announced the resignation of the three Chi Mei representatives from its board, Chimei Innolux also announced a plan to raise NT$15 billion by issuing corporate bonds via private placement.
The proceeds will be used to buy raw materials, replenish operational capital and repay bank loans, the company said in a filing to the Taiwan Stock Exchange. (May 16, 2012)
United Evening News:
The abrupt resignation of the three Chi Mei representatives from Chimei Innolux is related to Hon Hai's active pursuit of an alliance with Japan's leading LCD maker Sharp Corp. to battle South Korea's dominance in the flat panel market.
Market sources said Hon Hai Group Chairman Terry Gou has visited Japan many times in recent weeks to negotiate partnership terms. If it succeeds, it will mark the first time that leading companies from Taiwan and Japan have joined together to fight Korean competitors.
According to the sources, Hon Hai will name Sharp representatives to fill the vacancies on Chimei Innolux's board in late May.
Earlier this year, Hon Hai Group announced a deal to acquire just under a 10 percent stake in Sharp.
Moreover, Gou will personally acquire half of Sharp's 93.0 percent stake in a huge LCD plant in western Japan that uses advanced 10th-generation technology.
Industry insiders said the venture will be renamed as Sakai International Corp.
Both Sharp and its 10th-generation LCD venture are losing money at the moment, but Gou said confidently that the restructured 10th-generationLCD venture could become profitable three years later.
Gou said the venture will largely increase its production and will notcut its current work force. He also promised to have the company publicly listed in four to five years and to allow its employees acquire up to20 percent of its total shares. (May 16, 2012).
(By Sofia Wu)