In a filing today, Chinese display leader BOE (200725.CH) has indicated it will be selling shares in a non-public offering to raise capital for a number of projects. Under the plan, BOE will buy a 24% stake in the company’s B17 mixed use Gen 10 fab, additional capital for the company’s B12 Chongqing Gen 6 OLED fab (under construction), capital for the company’s micro-LED project, additional financing for the BOE Hospital, capital to repay loans provided by the city of Fuzhou (likely for the B10 LCD fab), and for ‘supplemental capital’. We note that BOE has recently agreed to purchase stakes in two LCD lines from Panda for $1.1b US, so some of that ‘supplemental’ capital could be related to that purchase.
According to the preliminary filing, the total amount to be raised is ~$31b US, some of which has already been allocated to a number of Chinese investment funds and includes an 18 month lockup. The deal pricing will be 80% of the 20 day average stock price previous to the closing, with the capital (if completed) to be allocated as follows:
This is obviously a very large capital project for BOE, who has been expanding at a rapid pace over the last few years and a key piece of the financing puzzle for what BOE is able to accomplish going forward. We believe some of the funding is to give the company better control over how the fabs are being run by lessening local government representation, while significant amounts will be for construction projects that the BOE BOD has already approved, such as the new fabs and the micro-LED project. That said, the total investment BOE has committed to for the projects above is over $105b US, so this financing will likely not be the last. More details to follow.
According to the preliminary filing, the total amount to be raised is ~$31b US, some of which has already been allocated to a number of Chinese investment funds and includes an 18 month lockup. The deal pricing will be 80% of the 20 day average stock price previous to the closing, with the capital (if completed) to be allocated as follows:
- 24.06% Equity in Wuhan BOE Opto $10b
- Capital Increase to Chongqing BOE and Gen 6 OLED fab $10b
- Silicon Micro-LED Project $1.54b
- Increased Capital for Chengdu Hospitals $.75b
- Loan repayment $4.63b
- Supplemental Liquidity $4.63b
This is obviously a very large capital project for BOE, who has been expanding at a rapid pace over the last few years and a key piece of the financing puzzle for what BOE is able to accomplish going forward. We believe some of the funding is to give the company better control over how the fabs are being run by lessening local government representation, while significant amounts will be for construction projects that the BOE BOD has already approved, such as the new fabs and the micro-LED project. That said, the total investment BOE has committed to for the projects above is over $105b US, so this financing will likely not be the last. More details to follow.
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