Chartered Semi Off; Below-Mkt Rts Offer; Reverse Split

Chartered Semiconductor (CHRT) shares are being shredded today on news that the Singapore-based contract chip manufacturer plans to raise $300 million via a highly dilutive rights offering.

Chartered will offer a 27-for-10 rights offering, with the rights priced at 45 cents per American Depositary Share, each of which represents 10 ordinary shares. That is a 71% discount to Friday’s closing price. The company’s largest investor, Singapore Technologies Semiconductor, which is a unit of Temasek Holdings, has promised to purchase its 59.4% share of the offering, and to act as a standby purchaser for up to 90% of the offering. The company also said that subsequent to completion of the offering, it will do a 1-for-10 reverse split, in part to address the danger of the ADS price falling below $1 for an extended period.

Chartered notes that at December 31 the company had $594.1 million in cash, as well as $1.84 million in debt and another $265.9 million in out of the money converts. Chartered said the rights offer is a “pro-active” step to manage its capital resources and to “preserve the confidence and commitment of its customer base.” Well, yeah, but the holders can’t be especially happy with this solution.

Meanwhile, Chartered also repeated its revenue guidance for the March quarter of $238 million, plus-or-minus $6 million, but trimmed its loss forecast to $127 million, from $147 million.

CHRT today is down 62 cents, or 40%, to 93 cents.