CHARTERED ANNOUNCES PLAN TO REPAY ITS EXISTING CONVERTIBLE NOTES

Chartered Semiconductor Manufacturing (Nasdaq:
CHRT and SGX-ST: CHARTERED) announced its plan to finance the redemption or
repurchase of its 2.5% US$575 million senior convertible notes redeemable in April 2006 1
(the “Existing Convertible Notes”). The redemption amount for the Existing Convertible
Notes including yield to maturity is approximately US$664 million. The plan consists of a
public offering of approximately US$450 million of senior notes (the “Senior Notes Public
Offering”) and a private placement of US$250 million of units (the “Units Private
Placement”). Closure of the Senior Notes Public Offering and the Units Private Placement are
not contingent on one another.
“Chartered strives to be proactive and forward-looking in managing its finances. There are
several benefits in undertaking this plan now: first, funds raised will allow us the flexibility to
either repay the Existing Convertible Notes when due in 2006 or to repurchase those earlier;
second, the plan also satisfies our de-leveraging objectives by refinancing a smaller portion of
the debt (represented by the Existing Convertible Notes) with equity (represented by the Units
Private Placement); third, we are substantially lengthening our debt maturity profile, at a time
when interest rates are low,” said George Thomas, senior vice president & CFO of Chartered.
The Senior Notes Public Offering is expected to raise approximately US$450 million and is
expected to consist of one or two tranches, with tenures of no less than five years (the “Senior
Notes”). The Senior Notes will constitute senior, unsecured obligations of Chartered and pay
interest semi-annually.
The “Units” comprise convertible redeemable preference shares due 2010 (the “CPS”) and
amortizing bonds due 2010 (the “Amortizing Bonds”), and is expected to raise an aggregate
amount of US$250 million.
The CPS will be convertible into new Chartered ordinary shares (the “Ordinary Shares”) or,
subject to certain limitations, American depositary shares (the “ADSs”) of Chartered at the
election of their holders, and are expected to raise approximately US$211 million. The CPS
will be convertible into Ordinary Shares at a conversion premium of 20% over the volume-weighted
average price of Ordinary Shares for the five consecutive trading days ending on
August 17, 2005, the date of the extraordinary general meeting of Chartered’s shareholders
(the “EGM”). The CPS are not mandatorily convertible into Ordinary Shares or ADSs and the
conversion price of the CPS is not subject to an automatic reset formula.
Successful completion of the Units Private Placement will allow Chartered to increase equity
without immediately diluting Chartered’s shareholders. The conversion premium of the CPS
is also expected to reduce the dilution to Chartered’s shareholders compared to an offering of
Ordinary Shares. If not converted, the CPS are expected to be redeemed for US$250 million
on their scheduled redemption date in 2010.
The Amortizing Bonds will constitute senior, unsecured obligations of Chartered. The
Amortizing Bonds will be issued with an initial principal amount of approximately US$39
million and will pay semi-annual cash amounts of US$4.56 million per payment, as a
combination of principal and interest, and will amortize to zero at maturity.
The Units Private Placement is conditional upon Chartered’s shareholders’ approval at the
EGM, the availability after the EGM of stock borrow of Ordinary Shares customary for a
transaction of this nature, and other customary closing conditions.
As soon as practicable following the completion of the Senior Notes Public Offering,
Chartered intends to conduct a tender offer to repurchase up to US$450 million of original
principal amount of its Existing Convertible Notes (the “Tender Offer”) with the net proceeds
raised from the Senior Notes Public Offering, together with cash on hand, to reduce
Chartered’s indebtedness. The purchase price for the Existing Convertible Notes in the
Tender Offer will be subject to market conditions and will be determined at the time of its
launch. Depending on market conditions and other factors, Chartered may amend the Tender
Offer upon the closing of the Units Private Placement to tender for all of the outstanding
Existing Convertible Notes.
Additional information in relation to the plan to refinance the existing Convertible Notes is
set out in the Appendix A attached hereto.
Webcast Conference Call Today
Chia Song Hwee, Chartered’s president & CEO, and George Thomas will host a conference
call to discuss the plan today, July 22, 2005, at 8:30 a.m. Singapore time (US time 5:30 p.m.
PT/8:30 p.m. ET, July 21, 2005). A webcast of the conference call will be available to all
interested parties on Chartered’s website at www.charteredsemi.com, under Investor
Relations, or at http://ir.charteredsemi.com.
APPENDIX A
Additional Information in Relation to the Plan to
Refinance the Existing Convertible Notes
Senior Notes Public Offering
Chartered intends to offer and sell the Senior Notes pursuant to its effective shelf registration
statement filed with the U.S. Securities and Exchange Commission (the “SEC”). The Senior
Notes Public Offering will be subject to customary closing conditions.
Chartered has obtained approval in-principle from the Singapore Exchange Securities Trading
Limited (the “Singapore Exchange”) for the listing and quotation of the Senior Notes. The
Singapore Exchange assumes no responsibility for the correctness of any of the statements
made or opinions expressed in this press release. Admission of the Senior Notes to the
Official List of the Singapore Exchange is not to be taken as an indication of the merits of
Chartered or the Senior Notes.
Units Private Placement
Chartered intends to offer and sell the Units in reliance on Regulation S under the U.S.
Securities Act of 1933, as amended (the “Securities Act”).
Chartered is convening the EGM to increase Chartered’s share capital, to approve an
amendment to Chartered’s articles of association (“Articles”) to incorporate the terms of the
CPS and to authorize the issuance of the CPS (and the Ordinary Shares issuable upon
conversion thereof). The amendment to the Articles requires a special resolution requiring the
approval of at least 75% of Chartered’s shareholders present and voting at the EGM.
Chartered intends to use the net proceeds from the Units Private Placement to redeem at
maturity the Existing Convertible Notes not repurchased in the Tender Offer or, depending on
market conditions and other factors, to repurchase the Existing Convertible Notes. Any
proceeds in excess of the amount necessary to so redeem or repurchase the Existing
Convertible Notes will be used for working capital and general corporate purposes.
Chartered is placing the Units with the trading division of Goldman Sachs (Singapore) Pte.
We have obtained approval in-principle from the Singapore Exchange for the listing and
quotation of each of the Units, the CPS, the Ordinary Shares issuable upon conversion of the
CPS and the Amortizing Bonds. The Singapore Exchange assumes no responsibility for the
correctness of any of the statements made or opinions expressed in this press release.
Admission of the Units, the CPS, and the Amortizing Bonds to the Official List of the
Singapore Exchange is not to be taken as an indication of the merits of the Company or the
Units, the CPS, the Ordinary Shares issuable upon the conversion of the CPS or the
Amortizing Bonds.
Restrictions on ADS Program
In order to ensure that the requirements for Regulation S under the Securities Act are satisfied
for the Units Private Placement, all holders of our Ordinary Shares who wish to make
deposits into our ADS facility during the period commencing on July 22, 2005 and ending on
September 27, 2005 (unless such period is extended as described below) will be required to
submit to the ADS depositary a certification in connection with such deposit. The ADS
depositary will provide the form of the certification and will require each depositor to certify
that:
· the beneficial owner of the Ordinary Shares to be deposited is not an affiliate of
us or acting on behalf of us, our affiliates or the purchaser; and
· the Ordinary Shares being deposited were acquired by such beneficial owner
prior to July 22, 2005.
We may extend the certification period by notice to the ADS depositary if we determine that
it is necessary or advisable for us to do so to comply with U.S. law. We will publicly
announce any such extension. For purposes of the foregoing, a “beneficial owner” of an
Ordinary Share means any person or entity having a beneficial interest deriving from the
ownership of the Ordinary Share.
Tender Offer
Chartered has not yet commenced the Tender Offer. The Tender Offer will be made only
pursuant to an Offer to Purchase and related materials that Chartered intends to distribute to
holders of the Existing Convertible Notes. Holders of the Existing Convertible Notes should
read carefully the Offer to Purchase and related materials when they become available
because they will contain important information. Holders of the Existing Convertible Notes
and investors may obtain a free copy of the Tender Offer Statement on Schedule TO, the
Offer to Purchase and other documents that Chartered intends to file with the SEC (when
available) at the SEC’s website at www.sec.gov. These materials contain important
information and holders of Existing Convertible Notes are urged to read them carefully prior
to making any decision with respect to the Tender Offer.
No Offering
This press release does not constitute an offer of any securities for sale. The Units, and the
CPS (and the Ordinary Shares issuable upon conversion thereof) and the Amortizing Bonds
comprising the Units, have not been and will not be registered under the Securities Act and
may not be offered or sold in the United States absent registration under such Act or an
applicable exemption from such registration requirements. The Senior Notes may not be
offered or sold in the United States absent registration or an exemption from registration
under such Act, which registration has been effected, and any public offering of the senior
notes to be made in the United States will be made by means of a prospectus that may be
obtained from Chartered, and that will contain or incorporate by reference detailed
information about Chartered and its management as well as financial statements of Chartered.
About Chartered
Chartered Semiconductor Manufacturing (Nasdaq: CHRT, SGX-ST: CHARTERED), one of
the world’s top dedicated semiconductor foundries, offers leading-edge technologies down to
90 nanometer (nm), enabling today’s system-on-chip designs. Chartered further serves the
needs of customers through its collaborative, joint development approach on a technology
roadmap that extends to 45nm. Chartered’s strategy is based on open and comprehensive
design enablement solutions, manufacturing enhancement methodologies, and a commitment
to flexible sourcing. In Singapore, Chartered operates a 300mm fabrication facility and four
200mm facilities.
Safe Harbor Statement under the provisions of the United States Private Securities
Litigation Reform Act of 1995
This press release contains forward-looking statements, as defined in the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-
looking statements include statements that reflect Chartered’s current views and expectations
relate to the closing of the proposed Senior Notes Public Offering, the closing of the proposed
Units Private Placement and Chartered’s present intention to conduct a Tender Offer of the
Existing Convertible Notes, and are subject to certain risks and uncertainties. Chartered
undertakes no obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Unless otherwise specified,
references to “US$” are to the lawful currency of the United States of America.