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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (53985)	10/9/2001 10:24:39 AM
From: Sun Tzu	Read Replies (1) \| Respond to of 70976

All (not just one) of those players have to exit DRAM before any sign of sanity returns to DRAM market. In the past I have made bets on a losing industry based on the assumption that the weaker players will die and the strong will take over. Time and again it has amazed me just how long it takes for that to happen. It always takes much much longer than your worst expectations because when it is a matter of survival, people accomplish a lot. I wonder what will be the effect of this downturn on emerging markets. Does anyone have an opinion on the health of the global markets in general and the emerging markets in particular? ST

To: Proud_Infidel who wrote (53985)	10/9/2001 12:33:56 PM
From: Sam Citron	Respond to of 70976

Hynix's Slide Puts a Strain On Korea's Banking Sector By HAE WON CHOI Staff Reporter of THE WALL STREET JOURNAL 10/9/2001 SEOUL, South Korea -- The growing financial problems of Hynix Semiconductor Inc. are straining a South Korean financial system already swamped with bad loans. After a recent respite, Hynix, the world's third-largest memory-chip maker, appears to be taking a turn for the worse. Last week, the ailing company's creditors agreed to freeze its debts until early next year, and credit-rating agency Standard & Poor's lowered the firm's senior secured debt to "selective default," saying that Hynix could default on some of its debt. Hynix, which has about $6.63 billion in interest-bearing debt, has been unable to maintain operations by itself despite two multibillion-dollar rescue packages put forth by its creditors over the past four months. That's on top of raising $1.25 billion through issuing global depositary receipts in June. Are Hynix's troubles just bumps in the road, or is it downhill from here? That's the question some bankers are trying to answer before injecting more cash into the chip maker. Korea Exchange Bank, Hynix's main creditor, says its support for Hynix was driven by the creditors' belief that a projected turnaround in global chip prices would make it a profitable company in the future. But because the U.S. economy faced an uncertain future even before the Sept. 11 terrorist attacks sent upset all predictions, some creditors are now questioning that optimistic forecast. "Hynix is a big headache for us," said an executive director at one of Hynix's state-controlled lenders that haven't made a profit since 1997. "Hynix's problem is expected to hurt our profits this year since we'll be increasing our loan-loss reserves." There is mounting concern among bankers and analysts about the potentially large losses the financial sector could suffer owing to Hynix. It is unlikely, analysts say, that banks will be able to recoup the loans extended in full, and the need for more government support for the financial sector is expected. The Hynix problem has also heightened criticism that the government is prolonging the country's economic problems by keeping alive weak companies with large debts and hefty losses. Most of Hynix's creditor banks have made provisions against 20% to 30% of their Hynix loans, and some are becoming more realistic about the potential losses they face. Koram Bank, which is owned by Washington-based buyout firm Carlyle Group and is one of the few healthy lenders to Hynix, said it would raise the loan-loss reserves of its total Hynix loan exposure to 80% by the end of the year from the current 40%. Other financially sound institutions, including Kookmin Bank and Korea First Bank, said they would also double their provisions against their Hynix loans by the end of this year. Raising loan-loss reserves against Hynix's loans would mean that banks will have to realize more losses than they expected, which, as a result, will hurt their earnings. The Hynix problem is just the latest that has bankers and analysts fretting about the increase in problem loans in Korea. Last month, the news that General Motors Corp. won't be assuming any of the domestic debt of bankrupt Daewoo Motor came as a blow to the financial sector, which, as a result, won't be able to recover 90% of the $10 billion that Daewoo Motor owes. Hynix's financial state has been a concern of bankers and policy makers since the beginning of this year, and the recent steps taken by the chip maker's creditors show that the South Korean financial sector will deal a blow to the economy should Hynix continue to suffer. Almost every South Korean financial institution, including National Agricultural Cooperative Federation, is exposed to Hynix. The government puts the size of bad-loan problem at about 30.2 trillion won ($23.1 billion) for all banks as of the end of June, but many analysts say that if borrowers were evaluated more strictly, the amount of problem loans could climb two or three times the government's estimates. Overhauling the financial industry has been a top priority for the South Korean government, which has spent more than 140 trillion won of public funds to recapitalize and restructure the financial industry since the Asian financial crisis. "Problem loans created under a weak economy won't bode well for the overall health of South Korea's economy and for the financial sector," said Fan Jiang at Goldman Sachs in Hong Kong. To be sure, Hynix said it would consider all options to strengthen its financial status by selling other assets unrelated to the memory-chip business as part of its restructuring. "The company will aggressively restructure to see a positive turnaround," said a spokesman for Hynix.