China's SMIC sells $172 mln shares to Datang Telecom

HONG KONG, Nov 11 (Reuters) - Semiconductor Manufacturing International Corp (SMIC) (SMI.N)(0981.HK), China's top contract chip maker, planned to sell $171.8 million worth of new shares to Beijing-based Datang Telecom Technology & Industry Holdings Co Ltd, raising funds to enhance its working capital position.

SMIC, which lags sector leaders TSMC (2330.TW) and UMC (2303.TW) in the made-to-order microchip market, said in a statement late on Monday that it would issue 3.7 billion new shares, or 16.6 percent of its enlarged share capital, to Datang Telecom at HK$0.36 a share, subject to a 2-year lock-up period.

The issue price represented a premium of 116 percent over the closing price of HK$0.167 on Nov 5. Trading in the shares, which was suspended on Nov 6, will resume on Tuesday.

"The investor would bring strategic value to the company and the funds raised in this transaction will improve the working capital position of the group and enhance its overall liquidity," SMIC's CEO Richard Chang said in the statement.

Chang added that the deal would enhance the company's presence in China and improve its global competitiveness.

Datang Telecom, an indirect unit of China's State Development and Investment Corp, and China Academy of Telecommunications Technology, is involved in development of TD-SCDMA third generation (3-G) mobiletelecommunication, wireless access and integrated circuit design.

For the statement please see here

Last month, SMIC said fourth-quarter revenue was likely to drop 25-29 percent from the third quarter, as the technology industry faces a slowing global economy that is taking its toll on consumer spending.

The company also reported its losses had widened to $30.3 million in the third quarter from $25.6 million a year earlier and said it was holding back on capacity expansion for now.

(Reporting by Nerilyn Tenorio and Donny Kwok; Editing by Ken Wills)