Global A&T Lawyers Say Default Claim Lacks Force and Effect

Global A&T Electronics Ltd.’s lawyers have replied to a bondholders default notice saying the allegation “is without force and effect,” according to the Nov. 12 letter seen by Bloomberg.

New York-based law firm Kasowitz, Benson, Torres & Friedman LLP state the default notice was “immaterial” because it didn’t represent 25 percent of the debt in question and no proof was offered after repeated requests to identify the holders.

“Neither your Nov. 7 letter nor your prior correspondence to Global A&T and the trustee provide any factual basis whatsoever to support your claims,” reads the letter, addressed to Lowenstein Sandler LLP, a U.S. law firm that says it represents the original bondholders. “As such, your purported notice of default is without force and effect.”

Global A&T received letters alleging that $502.3 million of extra 2019 senior secured notes issued to previous second-priority loan holders resulted in defaults after a debt swap, it said in a statement to the Singapore stock exchange last week. The exchange of about $543 million second-lien loans into newly issued senior notes triggered the default, according to the Nov. 7 letter from Lowenstein Sandler.

Josephine Lim, a Singapore-based spokeswoman for United Test & Assembly Center Ltd., a unit of Global A&T Electronics, declined to comment further on the correspondence today.

Credit Watch

The semiconductor testing company said on Nov. 12 via its lawyer’s letter that the “notes” according to the bond indenture should include the extra $502.3 million of securities issued in September, as well as the $625 million of 10 percent senior secured debentures due 2019 and issued in January.

Lowenstein Sandler said in its Nov. 7 letter that it represented more than 25 percent of the original $625 million 10 percent senior bonds due 2019.

Standard & Poor’s yesterday put the company’s B ranking on negative credit watch, saying a downgrade of more than one level is possible if a default is triggered. The ratings company may also cut its grade one rank if the debt exchange is canceled, impairing the company’s ability to refinance, or if resolving the dispute erodes liquidity.

The outlook will be changed to stable if there isn’t a default, or if the company cures the default in a timely manner while maintaining adequate liquidity, S&P said.

Global A&T is controlled by TPG Capital LLP and Affinity Equity Partners Ltd., which each hold 47.7 percent stakes. Global A&T was set up to privatize United Test & Assembly Center via a leverage buyout led by TPG and Affinity Equity Partners in October 2007. UTAC has factories in Singapore, Taiwan, Thailand and China.

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