21 Nov 2023
Capital raise from shareholders is part of wider debt restructuring effort by the maker of LEDs and laser diodes.
ams Osram says it is expecting to raise CHF775 million (€802 million) from existing shareholders in a new rights issue that forms part of a wider plan to restructure debt taken on when ams acquired Osram three years ago.
Back in 2020 the Austria-headquartered company agreed loan notes totaling €1.3 billion to help complete the €4 billion-plus Osram deal, with repayment due in 2025.
Since then it has also spent an estimated €800 million on the construction of a new LED manufacturing facility at the Kulim Hi-Tech Park in Malaysia.
Last week ams Osram said it had agreed new bonds worth €625 million and $400 million, in the form of senior unsecured notes accruing interest at 10.5 per cent and 12.25 per cent respectively.
Those loans will be used together with the proceeds of both the rights issue and the sale-and-leaseback of the Kulim facility to redeem the current loan notes, which are accruing interest at 6 per cent and 7 per cent, and to repay other debts.
Micro-LED boost in Kulim
Priced at CHF 1.07 per share, the new rights issue gives existing shareholders a discount on ams Osram’s stock price, which is currently trading at around CHF 3 on the “SIX” stock exchange in Switzerland.
News of the latest element of the refinancing plan had sent the firm’s stock down in value by more than 10 per cent, meaning that ams Osram has lost now more than half its market value since the start of 2023.
Underwritten by a banking syndicate, the rights issue will run from November 22 through December 4, with the newly issued shares admitted for trading on the SIX exchange shortly afterwards.
Reporting ams Osram’s latest financial results at the end of October, CEO Aldo Kamper announced quarterly sales of €904 million, down 25 per cent on the same period in 2022, with the firm's key industrial markets expected to remain depressed in the first half of 2024 before recovering later in the year.
Earlier this year Kamper said that he was planning to carve out the firm’s passive optical components business, as part of what was termed the “re-establish the base” strategy of focusing on its more profitable and faster-growing application areas.
The company is ranked by TrendForce as a close second to Japan’s Nichia in the supply of LEDs, with a market share of 13 per cent, while ams Osram remains the leading provider of lamps and bulbs for the automotive industry - a sector where Osram has long been a market leader.
While that business has historically relied on conventional applications like car headlamps, brake lights, and turn signal lamps, more recent product introductions include infrared LEDs and VCSELs for driver monitoring and autonomous driving functions.
The new LED facility in Kulim is expected to help drive the production and cost reduction of micro-LED components that have long promised to disrupt the displays market.
Kulim is said to be the world’s first LED facility where manufacturing will take place on 8-inch diameter semiconductor wafers, with ams Osram focused on delivering the very small die sizes and low defect densities required for micro-LEDs to become cost-effective.