Hey Sean. I think it's a lot easier said than done to replace the board, especially when we already have a deal on the table to eliminate them completely. The consolidation would already return our Bermuda cash to us, plus some more. If the Tsinghua investment goes through that dilutes us regardless of what happens with the merger, and we definitely want it to go through because China can provide us with a lot of growth if things go right.
The only way to be sure that they are aligned with our interests is for us to hold ADSs. We will then be treated just as fairly as Taiwanese investors and can get the same dividends etc. Until then there may be unequal treatment and money will continue to leak out from the current complex structure.
Like most of you I've been very frustrated with this underwhelming consolidation. We've had to wait far too long with too little to show for it. However, I talked to SK earlier this week and it only reinforced my belief that voting against it will only leave us worse off. Let's look at our alternatives.
Approval: IMOS shares would be worth $23.08 by today's price, and that's a real price, not one supported by the 8150 buyback which ended a couple of weeks ago. We would get a decent premium on the small number of shares that 8150 is buying from us. We would receive $1.20 dividend (or $.85 if the Tsinghua private placement is approved) after the merger.
Rejection: Shares would likely drop a lot from this already low level. ChipMOS Bermuda would likely still not use the Bermuda cash on smart buybacks. We would continue to lose 20% when ChipMOS Taiwan dividends to Bermuda, and then Bermuda would continue to hoard our cash and pay out a paltry $.14 dividend. We would be stuck with the same board members that have not looked after our interests. ChipMOS Bermuda is costing us a couple of million dollars a year for auditors, board member fees, etc...for a shell company! And that's excluding the cost to both companies to hire Wells Fargo and Credit Suisse in connection with the consolidation. It would also be unlikely that private equity or other Taiwanese companies would consider acquiring ChipMOS because the structure is too complex to make it feasible. It would also take a long time before they could put a new offer on the table and might hinder business opportunities with entities such as Tsinghua.
I know it's tempting to turn this offer down out of spite, but you'll only be hurting yourself. My fund voted in favor of the merger, and I suggest you do too. It just takes a minute - call 877-777-8133 and they can look you up with just your name and address. If you've already voted, you can still change your vote. Don't waste the value of your investment.
I miss exchanging with you guys on here, but unfortunately I'm much busier lately. I'm still actively following the company, though like many of you I'm frustrated by some missed opportunities, such as proper use of the cash for buybacks at low prices. If the Tsinghua investment goes through, the company will have a real mountain of cash, and it will be important that we see that it's used prudently.