Silicon General Inc, San Jose, California, has made a New Year’s resolution for its fiscal 1989 just started: it is going for a radical restructuring of the company – with financial help from Chase Manhattan Bank. The telecommunications equipment and chipmaking company plans to make its semiconductor division, headquartered in Garden Grove, California, a separate company. The present plan, which could be changed, is for the present shareholders of Silicon General to receive pro-rata shares in the new semiconductor company. The chip-making operations are in the esoteric field of linear bipolar integrated circuits for the power management industry – power semiconductors. The effect of the restructuring and the spin-off of the semiconductor business will lead to a one-time charge to profits for the company’s fiscal fourth quarter to July 3 last of some $11m, leading to a loss for the year of $12.2m on sales of $49m (CI No 987). The company hopes that the split will enable each side of the company to get all the attention it needs, and that it will not change in any way the company’s good relationships with employees, customers, and suppliers. The telecommunications business includes design and manufacture of telecommunications systems for local telephone companies, data conversion sub-systems and components. The contribution by Chase Manhattan Bank of New York is to make available to Silicon General substantial long-term and revolving credit facilities. Chase was also the financial advisor to the plan to split the company and enable Silicon General to lay its long-term emphasis on the telecommunications manufacturing business. The bank even wheeled out its second vice-president, Carolyn Wendler, to say that Chase is impressed by Silicon General’s ability to target high-growth segments of the telecommunications industry. We have confidence in the direction the management has taken and we are committed to helping them execute their strategy. We have further demonstrated our support by taking an equity position in the company. The company granted Chase Manhattan warrants to buy 1% of the shares of the reorganised company, on undisclosed terms.
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