Singapore Chip Firm Global A&T Nears U.S. Bankruptcy Filing

Global A&T Electronics Ltd., a Singapore- based chip assembler that took on hefty debt a decade ago through a buyout by TPG Capital and Affinity Equity Partners, expects to file for bankruptcy protection in the U.S. after years of struggling with creditors following a contentious 2013 debt exchange.

The company expects to commence the Chapter 11 case no later than Dec. 17, upon receiving sufficient acceptances to confirm its restructuring plan, it said in a filing.

TPG and Affinity Equity Partners took the company, previously known as United Test & Assembly Center Ltd., private in a $1.77 billion leveraged buyout in 2007. Pursued by bondholders since 2014, when a GSO Capital Partners fund and others cried foul over the debt exchange, Global A&T finally seemed to put the problem behind it when it announced a settlement in mid-September.

The controversy started in 2013, when the company issued $625 million senior secured notes, and later exchanged junior notes for senior debt. Assemblers such as Global A&T, which depend on demand from larger chip companies, are susceptible to changes in the business cycle, but the firm’s problems were exacerbated by its debt levels.

“The outsourced, assembly and test industry is highly cyclical but Gate faces company specific issues related to its balance sheet, which have developed over the past few years,” said Eric Nietsch, an analyst at S&P Global Ratings.

As part of the restructuring, the company plans to issue $665 million in 8.5 percent new secured notes due 2022, according to the filing. It will distribute about $517.6 million of the new notes to holders of the initial notes issued in 2013 and about $84.9 million to holders of additional notes issued later that year, the filing said.

“Companies operating in cyclical industries that have high technical obsolescence risk should not carry much debt,” said Charles Macgregor, head of emerging markets research at Lucror Analytics.

November 22, 2017, 03:39:13 GMT
By Denise Wee and Tiffany Kary; Edited by Andrew Monahan and Nikolaj Gammeltoft