Ams-Osram Implements Plan to Reduce Debt and Raise Capital

By Mauro Orru

Shares of Ams-Osram took a nosedive in Thursday morning trading following the announcement of a comprehensive plan by the Austria-based electronics company. Ams-Osram intends to raise over 2 billion euros ($2.10 billion) through a capital increase, bond issuance, and the sale of a portion of its semiconductor business in order to alleviate its debt burden.

As of 0815 GMT, Ams-Osram shares were down 18% to CHF4.24.

Ams-Osram, a leading manufacturer of sensors for various industries, has been grappling with declining smartphone sales that have dampened the demand for its components. Furthermore, it faces stiff competition from larger chip makers in the automotive end-market. By the end of June, the company’s net debt had reached EUR2.03 billion.

“Our comprehensive plan consists of new equity to reduce both gross and net debt, along with new senior notes to refinance additional outstanding debt, all with a harmonized maturity profile,” stated Chief Financial Officer Rainer Irle. “Additionally, we will explore additional financing initiatives, such as sale and lease-back transactions, in order to position the company for a healthy investment-grade leverage.”

The proposed plan by Ams-Osram includes raising EUR800 million through a capital increase, approximately EUR800 million through bond issuance, around EUR300 million from selling certain company assets and leasing them back, and an additional EUR350 million through unsecured notes, bilateral debt facilities, or other financial instruments. Collectively, this amounts to approximately EUR2.25 billion, which should cover the company’s financing needs until 2026.

Furthermore, Ams-Osram announced that it is in discussions with interested parties for the potential sale of its passive optical components business, as it does not align with the company’s core semiconductor portfolio. Proceeds from this potential sale could also contribute to reducing the company’s leverage.

Ams-Osram will present the proposed capital increase to shareholders for a vote at an extraordinary general meeting scheduled on Oct. 20.