Compal to spend NT$7 bln to buy shares of Chunghwa Picture

Jul. 17, 2009 (China Knowledge) - Compal Electronics Inc, the world's second largest contract maker of laptops in terms of shipments, will subscribe up to NT$7 billion in new common shares from Chunghwa Picture Tubes Ltd via a private placement, according to the latter's announcement yesterday.

Compal will buy 2.8 billion shares of Chunghwa Picture at NT$2.5 apiece, a price reflecting a discount of nearly 54% to the latter's closing price of NT$5.43 yesterday.

The transaction will make Compal the second-largest shareholder of Chunghwa Picture. The two companies will form a strategic partnership. Tatung Group, Chunghwa Picture's largest shareholder, will buy the remaining 1.2 billion new shares via its affiliates.

Chunghwa Picture hopes that the new partnership will help enhance cooperation with downstream customers and optimize its product portfolio.

According to the issuance plan, Chunghwa Picture will raise up to NT$10 billion through the private placement. The proceeds will be used to buy new facilities and equipment, fund operational costs and repay bank loans.

Earlier this month, Chunghwa Picture said it would introduce a strategic partner to replace Warburg Pincus, a U.S. private equity firm, China Knowledge reported.