Hynix may end up with foreign investors
By Jack Robertson, EBN
May 15, 2001 (3:15 PM)
URL: siliconstrategies.com
Hynix Semiconductor Co. (formerly Hyundai Electronics Industries Co.) could end up with one or more foreign investors owning a minority equity share as part of a $1.5 billion overseas financing effort launched Tuesday.
Farhad Tabrizi, vice president of worldwide marketing, told EBN that the foreign solicitation involves public and private stock sales and convertible bonds.
With Hynix stock now selling for as low as the equivalent of $4 a share on the Korean Stock Exchange, large investors in the new equity issues could end up with a significant minority interest, he agreed.
"With 500 million outstanding shares, the present Hynix valuation is about $2 billion, making this a big investment attraction," he said.
Tabrizi confirmed industry reports that Newbridge Capital Ltd. was "only one of many investment groups" that has been talking with Hynix about an equity investment. He declined to comment that talks with Newbridge may have broken off.
He said Hynix was not discussing any investments from other semiconductor companies. "We might consider a chip company that would make a good strategic match with our capabilities," he said, adding that Hynix had no intention of yielding any management control over the company.
As part of its restructuring to divest itself from the parent Hyundai Group, Hynix has been engaged for nearly a year in selling off about $1 billion in shares the company owns in other Hyundai affiliates, including Hyundai Investment Trust, Hyundai Logistics, and Image Quest.
Three Hyundai Group affiliates also own 19.2% of the semiconductor firm and are committed to sell that stock by the end of the year. Financial sources said because of the current low Hynix stock price, the other Hyundai affiliates are waiting until the shares increase in value.
The foreign cash solicitation follows a $4 billion refinancing of Hynix debt by domestic banks and creditors. Most of the funds are being used to refinance short term bonds that are maturing this year and causing a major financial crunch for the Korean firm.
Tabrizi said after the financial restructuring is completed, Hynix hopes to reduce its outstanding debt to $5.8 billion by the end of the year. Debt is currently at $6.5 billion, which is down from a high of more than $9 billion only a year ago.
The executive said Hynix will also use cash flow and some of the financing proceeds for capital investment, which is slated to increase to $1.2 billion next from $700 million this year.
He said capex will mainly go to upgrading existing fabs, but will include the firm's first 300-mm wafer fab to be built in Korea, slated for production in 2003.
"We know the semiconductor market is going to recover, and Hynix has one of the largest leading edge production capacities (350,000 8-inch equivalent wafers a month) in the industry. Almost half of this capacity is at 0.18-micron technology or smaller density," he said.
Hynix has also reorganized its board of directors, cutting the size to 10 members, with seven of these external directors. James Huzy, an American, and president of Arbor Co., was elected as one of the first foreign board members for the Korean firm. |
