Tuesday, April 26, 2011

Chinese company sells interest in its controlled BVI subsidiary

ChipMOS Technologies Ltd., the company incorporated in Bermuda and operating in Mainland China, announced that it will sell the notes of its controlled subsidiary Modern Mind Technology Limited, registered in the British Virgin Islands and wholly owned by another BVI company Jesper Limited. Under the agreement signed on April 22, 2011, ChipMOS will sell the MMT notes to ThaiLin Semiconductor Corp., which is a 42.9%-owned subsidiary of ChipMOS' 84.2% owned subsidiary, ChipMOS Technologies Inc. Proceeds from ThaiLin to ChipMOS will be US$39.95 million.

ChipMOS is managing its Mainland China operations through Modern Mind Technology Limited. According to the Chinese company, this transaction is an additional measure to streamline its corporate structure, designed to improve its profitability and better align with shareholder interests. ChipMOS does not have any equity interest in Modern Mind, it controls the British Virgin Islands through its ownership of the demand notes issued by Modern Mind, convertible into common shares with a controlling equity interest in the company.

Upon the completion of the transaction, ThaiLin is expected to immediately convert the MMT notes into common shares of the BVI company and purchase all of the remaining common shares of Modern Mind from Jesper, ChipMOS Shanghai becoming a wholly-owned subsidiary of ThaiLin.

Chairman and CEO of ChipMOS S.J. Cheng commented on the transaction saying that "This important, streamlining will be an accretive transaction to ChipMOS and will benefit our operating model and margin profile. Post transaction, there will be no change in how we report consolidated revenue from operations. We will continue to evaluate and pursue strategies that can further simplify our structure and increase return for shareholders."

ChipMOS is a leading independent provider of semiconductor testing and assembly services to customers in Taiwan, Japan, and the United States.