Bond redemption could spark ProMOS bankruptcy

Bond redemption could spark ProMOS bankruptcy

A bond redemption that could sink DRAM maker ProMOS will begin on Tuesday and last seven days.

A convertible bond redemption that could sink Taiwanese DRAM maker ProMOS Technologies will begin on Tuesday, according to a statement from the company.

ProMOS stands to become the second DRAM maker to file for bankruptcy protection if it fails to raise the funds necessary to meet early redemption of the bonds, which could total US$330 million.

According to the terms of the bond, ProMOS has a 7-day period to finish making the payments, the company said in a statement to the Taiwan Stock Exchange late Friday.

ProMOS has been in talks with the government for loans and has appealed to banks and other creditors for help. The company said it is still in talks with banks for an NT$5 billion (US$147 million) loan to help it cover the bond redemption.

Failure to meet the payment would force the company into bankruptcy protection. ProMOS would become the second DRAM maker to make such a filing during the global recession, after Germany's Qimonda which filed for bankruptcy protection last month, causing DRAM chip prices to soar.

ProMOS has also been in talks with several global DRAM makers to reach some sort of agreement to keep the company running, possibly as part of an alliance. One of those companies, Japan's Elpida Memory, has said it does not have enough money to lend any to ProMOS.

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