Business Context and Reporting Period
This Form 6-K filing by Advanced Semiconductor Engineering, Inc. (ASE) is dated September 30, 2015. The document consists of a press release titled "ASE's Response to SPIL's Letter to Shareholders." It addresses a dispute regarding a proposed share exchange between Siliconware Precision Industries Co., Ltd. (SPIL) and Hon Hai Precision Industry Co., Ltd. (Hon Hai). ASE is urging SPIL shareholders to vote against specific amendments to SPIL's Articles of Incorporation.
Financial Metrics
The filing text does not provide specific financial data for ASE, including revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on corporate governance and shareholder rights issues related to SPIL.
Material Changes and Corporate Actions
- SPIL Capital Increase Proposal: SPIL's Board proposed increasing authorized capital from 3.6 billion to 5 billion shares.
- Hon Hai Share Exchange: SPIL signed a Strategic Alliance and Share Exchange Agreement with Hon Hai on September 15, 2015, involving the issuance of approximately 840.6 million new shares to Hon Hai.
- Dilution Concerns: ASE states that the issuance of shares to Hon Hai will result in approximately 12% earnings per share (EPS) dilution for SPIL shareholders in 2016.
- Control Risks: ASE argues that if the 5 billion share authorization is fully utilized, SPIL management could control up to 47.02% of SPIL, potentially entrenching management and reducing shareholder oversight.
Guidance, Outlook, and Risks
Management Commentary: ASE contends that SPIL's proposed capital increase is unnecessary and potentially dilutive. ASE questions the fairness of issuing shares to Hon Hai at a "deep discount" and notes that significant revenue and profit contributions from the strategic alliance are not expected until 2017, with significant market share capture in the SiP market anticipated in 2018.
Shareholder Action: ASE urges SPIL shareholders to attend the Extraordinary General Meeting (EGM) on October 15, 2015, and vote "AGAINST" the amendment to the Articles of Incorporation and the amendment to the Procedures for Acquisition and Disposition Procedures.
Risks and Contingencies: The filing includes a Safe Harbor Notice regarding forward-looking statements. Risks cited include industry cyclicality, regulatory changes, competitive pressures, geopolitical tensions between the Republic of China and the People's Republic of China, and foreign currency fluctuations.
Key Facts for Investor Verification
- Verify the full text of the Strategic Alliance and Share Exchange Agreement between SPIL and Hon Hai, which ASE claims has not been fully disclosed.
- Confirm the voting date and agenda for SPIL's Extraordinary General Meeting scheduled for October 15, 2015.
- Assess the valuation and discount rate applied to the 840.6 million shares issued to Hon Hai.
- Review SPIL's projected EPS dilution of approximately 12% for 2016 versus the delayed revenue contribution timeline (2017-2018).
- Monitor SPIL's Board's response to ASE's request for a written commitment regarding future share issuances under Article 156, paragraph 8 of the ROC Company Act.