Infineon Announces Planned Launch Of Rights Issue For Up To 725 Million Euro In Gross Proceeds

July 12, 2009 by Jeff Shepard

Infineon Technologies AG announced plans to launch a rights issue of up to 337 million shares with a subscription price of €2.15 per share. Subject to the required prospectus approval by the German federal Financial Supervisory Authority (BaFin), the new shares will be offered to Infineon’s shareholders for subscription. Funds managed by an affiliate of Apollo Global Management LLC, have agreed to acquire at the subscription price up to approximately 326 million new shares not subscribed for, subject to certain conditions. Infineon expects to announce details of the offering, including the dates of the subscription period, in the near future.

If fully placed, the offering would raise new equity in a gross amount of €725 million in cash. Infineon intends to use the proceeds to repay debt and strengthen its liquidity position. In particular, the company plans to repay its convertible bonds maturing in June 2010, of which a nominal amount of €522 million are outstanding, and its exchangeable bonds maturing in August 2010, of which a nominal amount of Euro 48 million are outstanding.

The intended capital increase represents an important part of Infineon’s comprehensive refinancing plan. It should make a significant contribution to increase the economic value and sustainability of Infineon for the benefit of both the employees and the stakeholders", said Peter Bauer, CEO of Infineon Technologies AG.

This capital increase adds to the consistent sequence for the reduction of our liabilities: The buy-back of bonds, the placement of a convertible bond and the proceeds from the sale of the Wireline Communications segment. By not taking up further dept capital, Infineon’s accounting ratios strongly improve", said Dr. Marco Schröter, CFO of Infineon Technologies AG.

Apollo has agreed to provide a backstop for the rights offering relating to new shares not subscribed for. Apollo has committed to acquire at the subscription price up to approximately 326 million new shares not subscribed for, up to a maximum shareholding of 30% minus one share of Infineon’s share capital after implementation of the rights issue. This commitment is subject to the condition that Apollo, after implementation of the rights offering, would have a minimum shareholding of 15% of Infineon’s share capital. If this minimum shareholding is not achieved, Apollo may, but is not obligated to, acquire all new shares not subscribed for. Apollo’s investment is also subject to regulatory approvals.

Upon completion of a successful investment representing a shareholding of 15% or more of Infineon’s share capital, Apollo will have designated, with the support of Infineon, the chairman of the supervisory board and will obtain a second seat on Infineon’s supervisory board thereafter.

Shareholders of Infineon will be entitled to exercise subscription rights with respect to the new shares offered at a subscription ratio of four new shares for every nine existing shares held, and Infineon’s depositary will make such subscription rights also available for the holders of Infineon’s American Depository Shares. The subscription period for the shares will commence following prospectus approval which is expected next week or the week thereafter. Settlement for the subscribed shares will take place approximately two weeks after the commencement of the subscription period, with settlement of Apollo’s investment expected to occur following receipt of the necessary regulatory approvals.