TAIPEI–Chairman of Hon Hai Precision Industry Co. Terry Gou has pledged additional company shares as collateral for bank loans to finance his purchase of a stake in a flat panel plant owned by Japan’s Sharp Corp., market sources said Saturday.
According to the Taiwan Stock Exchange, Gou collateralized 210 million Hon Hai Precision shares for loans extended by Deutsche Bank and UBS on July 2 and July 3, respectively.
The sources said based on Hon Hai Precision’s closing prices of NT$89.00 (US$2.98) and NT$90.5 on the two trading sessions, the shares pledged to the two foreign banks were valued at more than NT$18.86 billion.
Before borrowing from the two banks, Gou pledged 160 million Hon Hai Precision shares to Mega International Commercial Bank for financing June 27, and the collateralized shares were valued at about NT$13.84 billion based on the closing price of the day — NT$86.50.
The sources said since June 27, Gou has pledged a total of 370 million Hon Hai Precision shares with the banks at a market value of more than NT$32.7 billion.
They said it was estimated that Gou must have borrowed about NT$19.62 billion from the three banks if the banks extended loans to him based on 60 percent of the total market value of the pledged Hon Hai Precision shares.
They added the funds were used to finance a purchase of a stake in Sharp’s plant, which manufactures 10th generation flat panels, located in the city of Sakai of western Japan.
Hon Hai Precision declined to comment on the share pledges made by Gou, saying it was Gou’s personal strategy in wealth management.
In March, Hon Hai Precision and three of its affiliates — Foxconn Technology Co. Ltd., Foxconn (Far East) Ltd. and Q-Run Holdings Ltd. — announced the purchase of a near 10 percent stake in Sharp for about US$800 million (NT$26.75 billion).
The four companies belong to Hon Hai Group, the world’s largest contract electronics maker. Hon Hai Precision is the flagship company of the group.
Under the deal, Gou, who is also known as the chairman of Hon Hai Group, agreed under his own name to acquire half of Sharp’s 93.0 percent interest in a huge LCD plant in western Japan for additional US$800 million.
Gou said through the strategic alliance with Sharp, Hon Hai Group will be able to take on strong competition from Samsung Electronics Co. of South Korea in the global LCD market by gaining access to the advanced production know-how from the Japanese partner. The market has expected the presence of Sharp will upgrade technology of Chimei Innolux Corp., which is the largest flat screen supplier in Taiwan and controlled by Hon Hai Group.