STATS ChipPAC, a chip-tester, recently raised US$600m. As STATS is undergoing a recapitalisation exercise, this means the $ will go to shareholders. Temasek has 81% of STATS.
Glad to see that that Temasek is using a private equity “trick” to enhance its returns. Borrowing money and using the loan proceeds to return $ to shareholders. Every little bit helps post the losses on Shin, ABC Learning, Merrill Lynch and Barclays.
Maybe Straits Trading should try this “trick” as a way to reduce the the loans that Tecity is alleged to have taken out to fund its controlling stake in ST. It owns over 70% of ST and ST has lots of solid assets that would provide gd security for the loans.
But borrowers have to be careful. It’s OK if the borrower’s controlling shareholder is a SWF but not if is juz a family company. Cash flow projections may be wrong, or bonds may mature at the wrong time.