Hon Hai to raise US$450 million through ECB issue

Taipei, July 30, 2003 (CENS)--Hon Hai Precision Ind. Co. Ltd., the largest private manufacturer in Taiwan last year, recently said that it would increase the amount of its scheduled issuance of exchangeable corporate bonds (ECBs) to US$450 million.

Hon Hai, the world's No. 1 barebone PC and connector maker, originally planned to issue US$400 million worth of ECBs, but it decided to raise the amount due to strong investor interest. Hon Hai had earlier planned to issue 250 million shares of global depository receipts (GDRs) before deciding to raise the funds through ECBs.

Hon Hai said that the ECBs issued this time are fully convertible into the company's general stocks. The company claimed that the ECB issuance could help it lower exchange rate risks and reduce its interest burden by about NT$464.4 million (US$13.5 million at US$1: NT$34.4) per year.

Hon Hai explained that the money raised from the ECBs would be used to fund the company's global expansions and tap new business opportunities. Hon Hai said that it is aggressively expanding facilities in the mainland Chinese cities of Shenzhen, Guangdong Province and Hangzhou, Zhejiang Province. It is also constructing a new plant in Hungary. In the second half, Hon Hai plans to set up a new manufacturing plant in Mexico, and it is also drafting plans to open facilities in Brazil and India.

Hon Hai aims to become one of the world's top-three electronics manufacturing service (EMS) providers in the world in the near future and climb to the No.1 position within a few years.

Hon Hai said that it has invested about US$44 million in the new Hungarian plant and would increase that amount to expand capacity there in the future if needed. The plant will produce mainly wireless telecom parts and components for major cell phone brands in Europe, including Nokia.

In addition to the scheduled plant in Hungary, Hon Hai said that it would soon integrate its manufacturing resources in the U.S., leaving only two facilities there for small-batch production and final assembly. The company will also decide on a location in Mexico by the end of September and begin construction a new plant, which is expected to be completed within six months. Hon Hai said that the Mexican plant would produce products mainly for customers in North America and Mexico.