Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Bilow who wrote (77606)	8/17/2001 4:33:37 AM
From: Don Green	Read Replies (1) \| Respond to of 93625

It's Now or Never for Korea Hynix Rescue-Analysts By Nam In-soo Friday August 17 4:09 AM ET SEOUL (Reuters) - Time may be running out to rescue South Korea's Hynix Semiconductor, which is facing the twin pressures of a cash crunch and depressed chip prices, analysts say. ``Hynix is one of the hardest questions for Korea to answer,'' said Jon Woo-jong, a semiconductor analyst at SK Securities. ``If creditors and the government want to solve the problem, they should do it now. Or they may lose the chance forever.'' The world's third largest computer memory chipmaker had 11.05 trillion won or $8.67 billion in liabilities as of end-June and needs to repay 1.24 trillion won in maturing debts by the end of this year. It got some breathing room in June, when it raised $1.25 billion in new equity and secured $4.4 billion in debt rescheduling and short-term financing arrangements from its principal bank creditors. But that hasn't been enough. U.S. ratings agency Standard & Poor's on Thursday slashed its outlook on the company's long-term ratings to negative from stable, citing worsening prospects for Hynix's profits and cash flow protection measures while the DRAM business remains in a deep slump. The spot price of 64 megabit SDRAM chips, the mainstay of the business, averages $0.80 per unit currently, a historic low. While maintaining its single-'B' long-term corporate credit ratings on Hynix, S&P said the chipmaker could face another downgrade unless it achieved financial flexibility through additional financing and debt rescheduling. Hit by the global decline in memory chip prices, Hynix last month said it slid into a second quarter loss of 266 billion won or $208.8 million from a profitable first quarter of 69 billion won. On Friday, Hynix's stock weathered the ratings cut. The shares have already been beaten down this year by the raft of bearish developments. ``Hynix's credit rating is already speculative grade. Any further degradation would not mean much to its share price, which has been in trough for so long,'' said Jon at SK Securities. Hynix shares closed down 40 won to 1,630 on Friday, a 60 percent drop so far this year. By comparison, the broader KOSPI index is up about 15 percent in the same period. FRESH CASH INJECTION Analysts said creditors of Hynix need to offer more support, including a fresh cash injection, to keep the memory chipmaker afloat until chip prices rebound. ``If Hynix collapses, its creditors, which are heavily exposed to the company's debt, will also be doomed. They are in the same boat,'' said Jung Chang-won, an analyst at Daewoo Securities. The Korean government, which has spent 127 trillion won ($99.68 billion) in taxpayer money on financial sector reform since the 1997-98 Asian financial crisis, also does not want to see Hynix go under, he said. However, the government denies it is leading a bail-out of the chipmaker. ``Let it be clear that during this decision-making process, the government has never interfered in any shape or form,'' Byeon Yangho, director-general of the Ministry of Finance and Economy's Financial Policy Bureau said in a letter to the Asian Wall Street Journal published on Friday. Yangho was responding to an editorial in the Journal that said the government announced a ``fat bail-out package'' in May for Hynix. REVIEWING OPTIONS Hynix said its debt advisers Salomon Smith Barney and creditors were reviewing the chipmaker's cash flow for a possible refunding, including a further debt rollover. ``Our creditors and Salomon Smith Barney are in talks and we have not heard from them yet,'' said spokeswoman Kang In-young. The semiconductor industry is unlikely to recover until the second half of next year, but analysts said Hynix is one of the chipmakers that would benefit most from a rebound in chip prices. ``A $1 rise in chip prices would fetch another one trillion won in gains for Hynix,'' said Jung at Daewoo Securities. ``If you want your goose to lay golden eggs, you (creditors) have to feed them a lot.'' ($1-1274.0 Won)