Senior Foreign Bk Officials Say Sale Of Hynix Necessary
DOW JONES NEWSWIRES
SEOUL -- Two senior foreign bank officials urged the South Korean government Thursday to sell troubled companies like Hynix Semiconductor Inc. (Q.HYY).
It is premature to say if Hynix could survive on its own, said Hubert Neiss, chairman of Deutsche Bank AG (DB) Asia Pacific operations, on the sidelines of an international conference held in Seoul.
The former director of the Asia-Pacific department of the International Monetary Fund said the sale of Hynix was inevitable. "The government can't keep Hynix forever," Neiss said.
A senior World Bank official also called on the government to accelerate the sales of troubled companies as part of its economic reforms.
Even "potential sales" of troubled companies would attract more foreign investment and would bring in advanced management skills, said Zia M. Qureshi, the World Bank's senior manager for its economic policy division.
Qureshi said the value of the assets of the companies in question could deteriorate if the sales negotiations are delayed. "Price is only one of the factors. Normally - from our experiences - it pays to do it quickly," he said.
The officials' comments came as the government and creditors weigh a proposal from Micron Technology Inc. (MU) to buy Hynix's memory chip operations for $4 billion. Creditors oppose some of terms the U.S. chipmaker set up in return for its purchase.
The government had Hyundai Electronics Industries Co. - the former name of Hynix - take over LG Semicon Inc. from LG Group as part of IMF-driven corporate reform to merge overlapping businesses among conglomerates after a financial crisis hit the country late 1997.
As for Korea's current economic scene, Neiss said the government must be prepared to take further fiscal and monetary stimulus steps in the future if necessary.
There will be "room and need" to stimulate the domestic economy via interest rate cuts and expanding government spending, if the world economy remains weak and Korea's exports don't recover, he said.
But the government doesn't need further domestic stimulus measures for now, he said.
The Bank of Korea cut key short-term interest rates four times and the government raised fiscal budgets twice last year to support the economy.
The central bank is expected to focus more on containing inflation this year as the economy bottomed out late last year.
Qureshi predicted a further upgrade in Korea's sovereign rating "in the near future," saying "it is very much on the bus to return to the (pre-crisis) level."
South Korea's sovereign bonds are rated BBB+ and Baa2 by Standard & Poor's and Moody's Investors Service, respectively, both four notches below the rating the bonds held before the Asian financial crisis.
Neiss and Qureshi are attending one-day international symposium to review South Korea's economic reform in Seoul.
-By So-Eui Rhee, Dow Jones Newswires; 822-732-2165; so-eui.rhee@dowjones.com
Updated February 21, 2002 3:50 a.m. EST |
