Semiconductor Manufacturing International Corporation (SMI) has reached an agreement with China's Datang Telecom Technology & Industry Holdings Co. Ltd under which Datang Holdings is investing USD172 million in common equity in SMIC for a 16.6% interest in the company.
Datang Holdings will acquire 3,699 million new SMIC common shares at HKD0.36 per share. Upon closing of the investment, Datang Holdings will have the right to nominate, for the appointment by the board, two board representatives out of a total of nine members of the board of directors at SMIC. In connection with the investment, Datang Holdings will also have the right to nominate a vice president at SMIC in charge of Time Division-Synchronous Code Division Multiple Access.
"We are looking forward to working with Datang Holdings and leveraging its technology and industry expertise, resources and relationships in wireless communication. This investment represents a validation of our strategy, strength of our business, and reflects the strides we have made in the worldwide semiconductor manufacturing space. Further, Datang Holdings' leadership in TD-SCDMA 3G development will enable us to capture the large market opportunity presented by China transitioning from 2G to 3G wireless communication," said Morning Wu, SMIC's acting chief financial officer. "We intend to use proceeds from this investment to pursue strategic opportunities, strengthen our domestic and global position, retain maximum flexibility in a difficult and challenging public financing market, improve our working capital condition, and assist our capital expenditures needs, among other general corporate purposes."
The closing of Datang Holdings' investment is subject to customary conditions, and approval from the relevant government authorities.