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United Microelectronics shares fell approximately 10% on Monday following the pricing of a $1.8 billion convertible bond sale. The Taiwanese chip foundry filed the transaction terms with the U.S.
Securities and Exchange Commission at 9:27 a.m. ET, just before the start of trading. The decline occurred despite a broader market rally in the S&P 500, indicating that the stock movement was specific to UMC.
The deal consists of two $900 million tranches that carry no interest payments. Holders have the option to exchange the bonds for new shares beginning three months after the October 13 issuance date.
If the bonds do not convert, investors receive slightly less than their initial investment, with annual yields of -0.25% and -1.35% for the two tranches respectively.
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