Singapore Technologies (ST) has undertaken to subscribe for its 60.5% pro-rata entitlement of a Chartered Semiconductor rights offering. There has recently been speculation that the state-run ST was seeking to disengage from its semiconductor investments such as the Chartered foundry operation and the packaging and test company STATS. ST is Chartered's largest shareholder.

The eight for ten rights offering aims to raise $633mn. The ST undertaking
is described as "irrevocable". The net proceeds are intended to help
Chartered strengthen its balance sheet and improve its debt-equity level. It
is estimated that debt-to-equity will be cut from 80% to 60%. Cash reserves
and credit facilities will be boosted to $2.1bn.
"A substantial portion of our future investment is expected to be in Fab 7,
an all-copper 300mm facility," reports the foundry.
The issue met a hostile reaction on the markets. The foundry had previously
claimed that it has sufficient funds to weather the downturn and to close
the technological gap with the bigger Taiwan foundry companies, TSMC and
UMC. The company's share of the foundry market is around 6%, compared with
42% for TSMC and 22% for UMC. Capacity utilisation is 40% rather than the
70% breakeven point. A Q3 net loss of $90mn is expected. A profit is not
expected until 2004.
Meanwhile, STATS has responded to questions from Singapore's stock exchange
(SGX) saying it "is not aware of any material information or development
involving the Company that could have a significant impact on the volume and
price traded of its securities on the SGX."
Acting chief financial officer Pearlyne Wang says: "We raised $200mn through
a convertible bond offering in March this year and, as previously reported,
as of June 30, 2002 had about $258mn of cash and cash equivalent and
marketable securities. We have no current plans for further financing this
year."