ASML raises 330 mln euros with convertible bond

AMSTERDAM, May 8 (Reuters) - Dutch semiconductor equipment maker ASML said on Thursday it aimed to raise 330 million euros ($373.6 million) with a convertible bond as it saw an opportunity to stock up on cash in a rough chip market.

Morgan Stanley sold the bond due 2010 in a so-called overnight transaction, with a coupon of 5.5 percent and a conversion price of 14.30 euros.

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ASML shares were five percent lower at 7.90 euros, but investors said they were not concerned the issue was a signal that the already tough chip market was getting any worse.

"ASML have debt maturing next year and this deal helps their financial position. They obviously are taking advantage of the recent share price rise," said Rob Radelaar, a fund manager at Robeco.

"The share price reaction seems overdone as the conversion price is so far away," said Radelaar, who owns ASML shares.

The deal was priced at 0600 GMT this morning with the books covered several times, said a banker familiar with the transaction.

The 75 percent conversion premium was the highest ever on a European convertible bond, with bankers saying that this was indicative of the huge demand for convertible bonds.

ASML shares reached a high of 52 euros in early 2000 and subsequently lost 90 percent of their value, dropping to a low of 5.13 euros in October last year as the chip industry went through its worst ever downturn as a result of a supply glut.

USE MONEY TO PAY FOR 2004 BOND

ASML , which has around half the world market for chip lithography machines which map out electronic circuits on silicon wafers, increased the amount it aimed to raise by 30 million euros since it announced the bond late on Wednesday.

The proceeds could be used to help pay for some $520 million for convertible notes which mature in 2004, the company said.

Only three weeks ago, when it published first quarter results, ASML said it stood by its target of achieving a balance of cash and cash equivalents of at least one billion euros by the end of the year, despite the tough market.

This took away concerns that ASML would not be able to pay for its 2004 convertible which helped drive the stock higher.

An ASML spokeswoman said the firm was not changing its outlook for the semicionductor equipment industry, adding that market conditions for convertible bonds were attractive.

"This just is a good time to raise money and hold on to it," spokeswoman Beth Kitchener she said.

Other semiconductor companies like Germany's Infineon and Netherlands-based ASMI also issued convertible bonds in recent weeks.

ASML Chief Financial Officer Peter Wennink told Reuters in the past he raised capital when he could, not when he needed to.

Kitchener reiterated her firm saw no upturn in demand for chip making machinery before the end of 2003. "If the recovery happens it will be in the fourth quarter at the earliest."

ASML shipped 27 new machines in the first quarter, well below the 45 it needs to ship in order to break even, as many chip makers, currently using only 75 percent of production capacity, are reluctant to invest in more efficient machines.

Analyst Ewald Walraven at ING said some of ASML's key customers in Taiwan were seeing decent growth again.

ASML, which competes with Japan's Nikon Corp and Canon Inc in the $2.8 billion chip lithography market, also granted underwriters the right to buy 50 million euros worth of additional notes to cover any over-allotments.