KEB denies report of possible Hynix sale

Aug. 29, 2002 – Seoul, Korea – Hynix Semiconductor Inc.’s lead creditor Korea Exchange Bank (KEB) denied a report that said creditors aim to sell the company before Korea’s presidential election in December.

Chosun Ilbo reported that in an internal document it obtained from KEB, creditors are initiating a process to restart asset sale talks with Micron Technology Inc. and other chipmakers in China and Taiwan. Creditor banks are in a hurry to recoup money lent to the company because they fear that presidential candidates will oppose the sale of Hynix, the report said.

“There is no internal document of such sort that we are aware of,” said a KEB official. “Negotiations are still in progress with Deutsche Bank and we haven’t received their final report.”

Hynix’s creditors have commissioned Deutsche Bank AG to map out a restructuring plan for the chipmaker. But analysts question whether the creditors will be able to sell Hynix as it continues to suffer from a heavy debt load – Hynix had total liabilities of KRW6.08 trillion as of June 30 – and continues to fall behind in technology compared to its rivals, reported Dow Jones. Such a heavy burden makes Hynix less attractive to buyers, they said, and that’s why a short-term remedy of writing off additional debt will help Hynix raise cash.

But renewed talks with Micron will be difficult, analysts said. “I don’t think Micron will accept the creditors’ proposal because Micron doesn’t have the ability to acquire Hynix right now,” said Chang-won Chung, an analyst at Daewoo Securities, citing a recent drop in Micron’s stock price. Micron’s shares have fallen 37% year-to-date from a high of $39.50 in March.

Chung said given Hynix’s debt and limited cash resources, Micron won’t be interested unless creditors write off more debt.

Local reports said creditors are looking into writing off about KRW1.85 trillion of the company’s debt, as well as deferring the maturity date on some loans in order to keep Hynix afloat until a buyer comes along.


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