Hynix creditors take over chipmaker

Seoul, South Korea – Hynix creditors have secured an 80.65% stake in the chipmaker to take total control, lending banks said, paving the way for a planned sale.

Korea Exchange Bank and 12 other banks converted 2.99 trillion won ($2.47 billion) worth of bonds into stocks at 708 won per share, to hold 4.23 billion shares, a KEB spokesman told aReuters. Hynix confirmed the changes in a statement.

“The new ownership is expected to call for a shareholders meeting in mid-July to set up a new executive board,” a Hynix spokesman told Reuters.

The move could help facilitate a planned sale of the world’s third-largest memory chipmaker, which had been stalled by Hynix management members who have been seeking solo survival.

Analysts said the share conversion by creditors would put more pressure on the Hynix stock price as some lenders had signaled their intention to dispose of holdings in the market.

Kookmin Bank and six other lenders can sell their combined 722 million shares, or 13.77 percent of total outstanding, immediately after the shares are listed on June 7.

Other creditors must keep their holdings until the end of this year under an agreement.

In late April, Micron Technology Inc (NYSE:MU – News) offered to pay $3 billion for the memory operations of Hynix with the backing of creditors but the Hynix board refused the offer.

The prospect of Hynix surviving alone looks slim after the firm lost $3.9 billion last year and after a decline in memory chip prices since March has dashed hopes that enough operating profit could be generated to repay lenders.

Creditors have commissioned Deutsche Bank and Morgan Stanley Dean Witter to conduct due diligence studies on Hynix to speed up the break-up of the company, a move designed to make it easier to sell its operations in piecemeal, Reuters reported.

While the bulk of creditors appear firmly behind a Hynix sale, some politicians seem to rethinking the issue.

Jin Nyum, 61, former finance and economy minister, who is running in the June 13 local elections for the governorship of Kyonggi province, where Hynix has its plant, has been saying that he supports Hynix’s solo revival.

In his previous role as a minister he said that Hynix should find a buyer to keep it afloat.

Other candidates taking part in the elections in districts where Hynix has plants have also said they favor the firm’s attempt to stay independent.


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