Massive debt held by Korean DRAM fabbers, or why bankers go gray:
A service of Semiconductor Business News, CMP Media Inc.
Story updated at 4 p.m. EDT/1 p.m. PDT, 8/13/98
DRAMs erode results at Korean chip makers
By Jack Robertson
WASHINGTON -- The DRAM price collapse
clobbered the earnings of Korea's three big chip
makers during the first half of 1998. Samsung
Electronics Co. Ltd. managed to squeeze out a small
profit gain in the first six months of the year while
Hyundai Electronics Industries Co. Ltd. and LG
Semicon Co. Ltd. continued their string of losses.
Samsung reported net earnings of $113 million (150
billion won) in the first half, up from $92 million (123
billion won) for the same period a year ago. Sales
totaled $7.9 billion for the six months, up 18% from the
year-ago period.
Hyundai Electronics had a $250 million loss (330 billion
won) in the first half, compared with a profit of $11.3
million in the period last year. The loss came in face of
a sharp increase in sales in the first half -- up 63% to
$1.75 billion (2.3 trillion won) compared to last year.
LG Semicon reported a $188 million loss (250 billion
won), compared with a $12 million profit in the first half
of 1997. The company's first half sales rose 42% to
$912 million (1.2 trillion won) compared to revenues a
year ago.
Massive levels of debt continued to plague the Korean
chip companies. Hyundai reported its debt at June 30,
totaled $8.4 billion, which is equal to 930% of its
equity. Hyundai said the lower value of the won
resulted in its foreign-currency debts doubling in value
in the six month period.
Meanwhile, LG Semicon said its foreign currency debt
was $3 billion at the end of June, and its total debt level
equaled more than 500% of its equity.
A financial audit of the Korean company debt
statements by Coopers & Lybrand revealed that at the
end of 1997 Samsung Electronics had $251 million
debt with Citibank, and much smaller debt levels with
Chase Manhattan Bank. ING, Tokai Bank and Long
Term Credit Bank of Japan. Samsung had $5 billion in
long-term loans and $1 billion in short-term loans,
predominately with domestic banks and government
lending agencies.
The audit showed LG Semicon had $2.9 biliion in
long-term and $276 million in short-term loans at the
end of 1997 virtually all with Korean financial
institutions. It also revealed that LG had adopted a debt
repayment schedule to pay back $773 million in 1999,
$1.5 billion in 2000m $493 million in 2001 and $265
million in 2002. Hyundai short-term debt at the end of
last year was $1.47 billion and long-term debt was
$3.27 million. Hyundai's repayment schedule was
disclosed as $1.29 billion in 1999, $1.34 billion in
2000, $563 million in 2001 and $290 million in 2002.
|
