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Aviza Threatened As Financial Gloom Deepens

With its share price in free-fall and the Nasdaq threatening to de-list its stock, the semiconductor equipment firm Aviza Technology re-negotiates a loan deal at a higher interest rate.

The market value of etch and deposition tool supplier Aviza Technology has crashed to an all-time low, as shattered confidence in global finance begins to impact semiconductor companies.

Shares in the US firm, headquartered in Silicon Valley and with operations in Newport, UK, slumped more than 40 percent on Monday October 6 to just $0.26. That represents a market capitalization of less than $6 million.

While investors have shunned virtually all stocks in recent days, Aviza has been particularly badly hit, and has shed more than 90 per cent of its value over the past year.

Because its share price has been below $1.00 for more than six straight months, the Nasdaq stock exchange has threatened Aviza with de-listing, and the company now also faces higher loan repayments.

On September 30, the firm significantly changed its existing $44 million arrangement with three creditors "“ United Commercial Bank, East West Bank and Chinatrust Bank.

Those changes included cutting Aviza s maximum available credit facility to $29 million, along with a hike in the interest rate payable on the loan of nearly two percentage points.

A further change saw the maximum allowable ratio between the company s debt and its net worth reduced from 4:1 to 3.75:1.

The following day, October 1, a further amendment extended the maturity date of the loan to October 13, 2009, but only on the condition that Aviza meets some stiff targets in its next financial quarter.

According to that second amendment, Aviza must post earnings of at least $500,000 in the period that ends on December 31, excluding certain expenses such as amortization and depreciation costs.

If it does not hit that target, Aviza s loan will instead mature six months earlier, on April 13. In its latest reported financial results, for the three months that ended on June 27, 2008, Aviza posted an operating loss of $5.3 million on sales of $33.5 million.

After counting all costs, including an interest payment of $487,000, the company registered a net loss of $5.6 million.

At the time, Aviza s balance sheet showed short-term bank borrowing of $28.6 million "“ just below the new credit limit "“ with cash and cash equivalents of $11.8 million.

When contacted by compoundsemiconductor.net, Aviza declined to comment on the recent developments, because it is now in what is described as the “quiet period" "“ the weeks leading up to a quarterly results announcement.

However, the company is in the process of appealing against the Nasdaq de-listing threat, and for the time being remains traded on the exchange.

Update: On Tuesday, October 7, Aviza s share price rose strongly in early trading, and stood at $0.44 shortly after the markets opened. At that price, the company s market capitalization is approximately $9.6 million.

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