Taipei, Feb. 6, 2010 (CENS)--Taiwan Ratings Corp. (TRC) recently revised its outlook on the long-term corporate credit ratings on Nanya Technology Corp. and Inotera Memories Inc. to stable from negative. At the same time, the rating agency affirmed its `twBBB+` long-term and `twA-3` short-term corporate credit ratings as well as the `twBBB` unsecured corporate bonds rating on the two firms.

The outlook revisions reflect Nanya Technology and Inotera`s improved profitability and decreased leverage in the fourth quarter of 2009. The outlook also reflects TRC`s expectation that improving cash flow generation and the companies` planned rights issues will enable Nanya Technology and Inotera to maintain adequate leverage commensurate with the ratings, despite anticipated high capital expenditures.

TRC noted recovering demand and refrained capital expenditures in the DRAM industry, partly as a result of stressed financial conditions at some DRAM markers, will largely support DRAM prices at current levels over the next 12 months. TRC expected Nanya Technology`s and Inotera`s production costs to decline along with their current technology migration. Accordingly, TRC believed the two companies will improve their profitability and cash flow in the next three to four quarters.

The rating affirmations reflect continued strong financial support provided by the FPG in process technology relative to its local peers`. Counterbalancing factors include the high-risk nature of the global DRAM industry, the two firms` high concentration on commodity products, their weak proprietary control of advance process technology, and high leverage.

Nanya Technology and Inotera have adequate liquidity backed by their affiliation with the FPG. At the end of 2009, Nanya Technology`s unused medium-term facilities included the NT$18 billion of loans it has secured in December 2009 compared with NT$16.7 billion in long-term debt due in one year. At the same time, Inotera had NT$5.38 billion of cash and liquid financial investments and short-term credit facilities including NT$11.5 billion and US$280 million, compared with NT$15.23 billion in long-term debt due in one year. Both companies` improving operating cash flow generation, planned rights issue and upcoming syndicated bank facilities should provide strong cushion for their liquidity over the next few months.

(by Ben Shen)