Tsinghua Unigroup received a $788 million investment from FCII. However, the Taiwanese government is purportedly considering fining Foxconn up to T$25 million.
FII Might Be Fined for Acquiring Tingshua Unigroup
A source cited by Reuters on Friday (July 8) reports that the Taiwanese government is allegedly contemplating fining Foxconn up to T$25 million (US$835,600) for investing in Tsinghua Unigroup without first obtaining regulatory clearance.
Foxconn Industry Internet (FII) is a Hon Hai Technology Group company listed on the Shanghai Stock Exchange. It has bought a small share in Tsinghua Unigroup, a chip manufacturer supported by the Chinese government.
It invested $788 million in Tsinghua Unigroup through Guangzhou-based Xingwei Industrial Investment Partnership Fund. FII and Wise Road Capital, the primary investor in Tsinghua Unigroup's debt restructuring, established Xingwei in March 2022.
However, poor cross-strait ties due to geopolitical concerns, supply chain bottlenecks, and mainland China stealing Taiwanese semiconductor expertise might cast a shadow over the agreement.
The primary investor behind the debt restructuring of Tsinghua Unigroup, Wise Road Capital, and FII established the Xingwei investment fund in March 2022. A 99% ownership in Xingwei is under FII's control.
Unigroup's debt restructure saved one of China's most prominent corporate bankruptcies, which may have affected semiconductor industry leaders. Unigroup said a 60 billion yuan ($8.94 billion) rescue plan would provide creditors with a 95 to 100 percent return on its investment.
Beijing Zhiguangxin Holding, the new owner of Tsinghua Unigroup, was established by Wise Road Capital and its sister firm Beijing Jianguang Asset Management Co, also known as JAC Capital, last year. They have completely absorbed Tsinghua Holdings and Beijing Jiankun Investment Group's share in Unigroup.
Tsinghua Unigroup Restructures Debt and Changes Ownership to Save its Businesses
The year-long debt restructuring procedure for Tsinghua Unigroup, a previously high-flying technological conglomerate connected to China's top university, has been completed, according to a report from SCMP. It will end the company's risky struggle to maintain some of the country's largest semiconductor operations.
Tsinghua Holdings and Beijing Jiankun Investment Group have completely transferred their ownership of Unigroup to the new owner Beijing Zhiguangxin Holding. It was established last year by lead investor Wise Road Capital and its sister fund Beijing Jianguang Asset Management Co, also known as JAC Capital.
According to a statement from the corporation, cash payments to Unigroup's creditors will begin as early as Wednesday. The company said that between 95% and 100% of what is due to creditors would be reimbursed.
This repayment scheme requires a cash expenditure of 60 billion yuan ($8.94 billion) and debt-to-equity swaps. It was designed by a consortium of investors headed by Wise Road Capital in December and agreed upon by all parties later that month, according to Unigroup. Beijing First Intermediate Court completed the company's debt restructuring in January, initiating a six-month execution phase.
When the company's cash flows were in decline, and it was under pressure to settle maturing loans in both domestic and international markets in 2020, the firm's debt problem erupted. Unigroup, formerly seen as a critical actor in Beijing's pursuit of semiconductor independence amid the rising US-China tech conflict, suffered a significant setback when it entered bankruptcy procedures last year.
Unigroup is notorious for its failed US$23 billion offer for US semiconductor company Micron Technology in 2015. It had over 200 billion yuan in total liabilities following years of ambitious development into fields outside technology.
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