GlobalWafers Co., Ltd., a Taiwan-based silicon wafer maker, has proposed a convertible bond placement of up to US$500 million to Micron Technology, Inc., alongside a planned 10-year supply arrangement between the companies.
GlobalWafers said its board approved the proposal Nov. 3 and named Micron as the sole subscriber. The domestic unsecured bonds would run for 10 years and carry a 0.5% annual coupon. If shareholders authorize the plan, directors could issue the bonds in one tranche within a year of that resolution. The company said final terms and timing would be set later.
Micron announced in July that it planned to provide up to $500 million in strategic financing for development and manufacturing at GlobalWafers America’s 300mm raw silicon wafer facility in Sherman, Texas. Micron also said the companies intended to establish a 10-year supply agreement that would give it access to substantial wafer capacity for future production.
GlobalWafers said the financing and planned supply arrangement are intended to bolster its U.S. business and advanced wafer production. The company cited the scale of investment required in the industry, long development periods and customer qualification requirements as reasons to plan capacity well in advance. If issued on the proposed terms, GlobalWafers would pay the annual coupon, while Micron would gain access to wafer capacity under the planned supply arrangement.
The proposal follows GlobalWafers’ September sale of $1.432 billion in global depositary receipts. The company said proceeds would support foreign-currency raw material purchases and capacity expansion at overseas subsidiaries. Shareholders’ approval is the next step; GlobalWafers did not give a meeting date.
