MiTAC Holdings has approved a major fundraising plan, combining two unsecured convertible bond offerings with a cash capital increase. The company said the proceeds are intended to replenish working capital as it handles component procurement needs and overseas capacity expansion tied to its AI server business.
Two convertible bond tranches and a share sale
The board approved two five-year unsecured convertible bond tranches, both carrying a 0% coupon, with a combined fundraising ceiling of NT$12 billion.
- CB1 will raise up to NT$10 billion. It will be marketed to specific institutional investors through book building, with a tentative issue price of 100.5% to 101% of par value.
- CB2 will raise up to NT$2 billion. It will be sold through a public underwriting auction, with a floor bid set at 105% of par value.
MiTAC is also moving ahead with a cash capital increase of 120 million new shares. Under the allocation plan, 10% will be reserved for employee subscription, 10% will go through public underwriting, and the remaining 80% will be offered to existing shareholders. The final issue price will be set after the filing takes effect.
Working capital needs tied to AI server operations
In its filing, MiTAC said the funds will be used to strengthen working capital. The report says the market has broadly linked the fundraising to AI server expansion, U.S. production capacity buildout, and demand for high-end graphics processing units, or GPUs, but the company’s announcement itself only described the use of proceeds as working capital replenishment.
As cloud service providers accelerate AI compute infrastructure deployment, high-end GPUs installed in servers remain expensive. That leaves contract manufacturers and assemblers carrying a larger working capital burden for materials procurement and inventory management before shipments are completed and receivables are collected.
At the same time, MiTAC has been pushing ahead with assembly line construction in overseas locations including the United States. The report also points to expansion by MiTAC Digital in edge computing, which has added to the company’s need to build capital reserves early.
TD Synnex stake sale also approved
Separately, the board approved the disposal of shares in investee TD Synnex Corp. as part of an effort to improve group cash flow and asset liquidity.
Dilution and conversion terms will be watched
The structure of the fundraising carries several implications for MiTAC’s balance sheet. Because the convertible bonds are being issued at a premium and carry a 0% coupon, the company can limit interest expense. For investors in those bonds, returns will depend mainly on the potential capital gain if the notes are later converted into common shares.
The larger question is dilution. The 120 million newly issued shares, together with any future share conversion from the bonds, would increase the number of shares outstanding. That creates dilution risk. If earnings growth fails to keep pace with the increase in share capital, earnings per share, or EPS, could face pressure in the near term.
Market attention is likely to center on the final offering price, the eventual conversion price, and how effectively MiTAC turns the fresh capital into actual operating results.