* Offers 27 shares at S$0.07 apiece for every 10 held
* Temasek to subscribe for up to 90 pct of rights
* Cuts loss estimate for current quarter
* Says business appears to be stabilising
* Stock falls 18 pct before being suspended
(Adds confirmation by company, details)
HONG KONG/SINGAPORE - Chartered Semiconductor, the world's third largest contract chip maker, said it plans to raise $300 million through a rights issue to shore up its finances amid a deep industry downturn.
Confirming an earlier Reuters report, Chartered -- 59 percent held by Singapore state investor Temasek -- said it would offer existing shareholders 27 shares at S$0.07 apiece for every 10 shares held.
Temasek will support the cash call by subscribing for up to 90 percent of the share issue.
The rights offering will strengthen the company's capital position, and provide Chartered with additional liquidity to manage its maturing indebtedness, fund planned and future capital expenditures, the Singapore firm said in a statement.
Chartered said it planned to reduce the number of outstanding shares by consolidating 10 shares into one share after the rights issue is completed.
Shares in Chartered fell 18 percent to S$0.205 shares before they were suspended on Monday, after Reuters cited sources saying the firm was planning a rights issue to raise around $300 million.
Chartered's balance sheet does not look good this year and they really need funds for working capital, said Nomura semiconductor analyst Rick Hsu in Taipei. The company is struggling and its capacity utilisation rate is at a low level.
Chartered said on Monday, however, that its business appeared to be stabilising with orders showing signs of improvement in February compared with January.
The firm is now expecting a net loss of around $127 million for the current quarter compared with an earlier estimate of $147 million, it said.
Moody's Investors Service earlier this month downgraded Chartered's unsecured bond ratings to Ba2 from Ba1 and said the rating continues to be on review for a further downgrade. Standard & Poor's cut Chartered's long-term credit rating last month.
State-controlled Chartered ranks alongside China's Semiconductor Manufacturing International Corp in the market for custom-built microchips, which is dominated by larger rival Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp.
Deutsche Bank, Citigroup and Morgan Stanley are working with Chartered on the offering.
Chartered's shares had been rising this year on speculation of a possible merger with its larger Taiwanese chip-makers, even though many analysts had described the move as unlikely.
The shares had tumbled about 80 percent last year.
Teamsek has backed at least four other rights offerings since late last year. These included capital raising by Standard Chartered and Singapore's DBS Group.
It is also supporting the rights issue of 58-percent-owned PT Bank Danamon Indonesia's fifth-largest lender, and 40-percent-owned CapitaLand, Southeast Asia's largest property firm.
For an analysis on Asian sovereign wealth funds click [ID:nSIN287928]. ($1=1.545 Singapore Dollar) (Additional reporting by Baker Li in Taipei and Kevin Lim in Singapore; editing by Simon Jessop)