Creditors To Renegotiate Hynix Sale Terms With Micron
DOW JONES NEWSWIRES
SEOUL -- Creditors of South Korea's Hynix Semiconductor Inc. (Q.HYY) said they will reject Micron Technology Inc.'s (MU) latest offer to buy Hynix's key assets and will continue to negotiate, said Lee Youn-soo, vice president of Korea Exchange Bank (Q.KEB) on Monday.
Korea Exchange Bank, Hynix's main creditor, led a meeting - attended by 12 of Hynix's largest financial creditors on Monday - to hammer out their position on the recent acquisition proposal from the U.S. chipmaker.
Hynix is in talks to sell some key assets - likely its memory chip operations - to Micron.
Lee declined to say when creditors could present a counterproposal but said it will be made "hopefully soon."
"There are many areas that need to be further discussed among creditors before we could send a revised proposal," he said.
Confirming local press reports, creditor bank officials said Micron has asked creditors for $1.5 billion worth of loans and offered to buy Hynix's memory operations for $4 billion in its stock and cash.
Micron also has maintained it would cut its investment amount if additional Hynix debt is subsequently found, according to creditors.
But creditors will ask Micron to revise some of its offer, including the loan request, said Lee Choi-hwi, executive vice president of Hanvit Bank (Q.HVB).
Creditors also want an assurance from Micron that the Idaho-based company would invest in Hynix's remaining assets in the non-memory chip division. But Micron has so far only offered to buy memory chip operations, said Hanvit's Lee.
If it sells the memory operations only, Hynix would be left with six wafer fabrication plants that produces non-memory chips. Non-memory chip operations make up just 28% of the company's total sales while memory chips account for the rest.
But any deal solely involving asset sales would do little to relieve Hynix's huge debt load. Hynix had a total of 8.64 trillion won ($1=KRW1,316.60) in debt at the end of last year.
Creditors didn't say if Micron would assume any debt, but local reports say Micron continues to resist assuming any of Hynix's liabilities.
Hynix's debt could be lowered to about KRW5 trillion, after creditors complete a debt-to-equity swap in May. The company has a separate $1.14 billion in foreign debt.
While Hynix said Monday that it might pursue being a "stand-alone" company, creditors didn't discuss that option during its meeting, said Korea Exchange Bank's Lee.
Hanvit's Lee said, "We aren't at a stage to discuss the stand-alone plan for Hynix yet."
Hynix's board of directors said Monday that the company will study the option of surviving on its own if creditors provide further financial support.
If not, it will sign a deal to sell its memory chip operations to Micron, as long as the deal includes Hynix's non-memory chip operations.
Analysts say Hynix would require new loans of at least KRW1 trillion to have any chance of surviving alone. The company also would need its creditors to write off about 30% of its current debt, an unlikely scenario.
"We can't consider any further write-off," said Hanvit's Lee.
Creditors will own nearly half of Hynix after they complete the debt swap. They provided two multibillion-dollar bailouts to Hynix last year.
Key creditors are state-run Korea Development Bank (Q.KDV) with KRW1.01 trillion in Hynix debt exposure, Korea Exchange Bank with KRW985 billion, Hanvit Bank with KRW965 billion and Chohung Bank (Q.CHB) with KRW746 billion. The government holds the controlling stakes in these banks.
Under Korean corporate regulations, a company that has received a creditor bailout needs 75% approval from its creditors to sell any key assets.
Some individual Hynix shareholders held a protest outside Korea Exchange Bank Monday, opposing the company's sale to Micron.
A shareholder group - leading the "Save Hynix" campaign - is seeking to consolidate shareholders' voting rights online to block any deal with Micron.
Individual shareholders own 84% of Hynix.
-By Suh Hae-sung, Dow Jones Newswires; 822-732-2165; hae-sung.suh@dowjones.com
Updated February 18, 2002 5:37 a.m. EST
online.wsj.com |
