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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: Chas who wrote (53565)	2/15/2002 7:16:31 PM
From: Ohkami	Respond to of 53903

Hi chas, thanks for the info. I've put together an overview of the deal from a valuation perspective: \| Total Valuation \| Creditors' 45.5% \| Debt Write-Off -------------------------------------------------------------------------- Hynix Total \| KRW 6.6 trillion \| KRW 3 trillion \| KRW 1.4 trillion Restructuring \| =USD 5.01 billion \| =USD 2.28 billion \| =USD 1.06 billion Valuation \| \| \| \| \| \| Recent Hynix \| KRW 2.94 trillion \| KRW 1.34 trillion \| Total Market \| =USD 2.24 billion \| =USD 1.02 billion \| Valuation \| \| \| ------------------------------------------------------------------------ Micron Deal \| USD 4 billion \| USD 1.82 billion \| USD 0.46 billion Memory \| \| \| =2.28 billion Valuation \| \| \| - 1.82 billion \| \| \| =Implied value \| \| \| of creditors' \| \| \| stake in non-mem \| \| \| \| Implied Non- \| USD 1 billion \| USD 0.46 billion \| <-------- Memory Biz \| \| \| Valuation \| \| \| ------------------------------------------------------------------------ As can be seen, the valuation of memory vs non-memory parts is about 80%/20% of total Hynix value if we assume that creditors are not going to write off any more debt in this deal. This seems quite reasonable, even generous, given that revenues are split about 70%/30% between memory and non-memory and that I would regard Hynix non-memory operations as equally weak or weaker than their memory operations. And if Micron takes a 25% stake in Hynix' non-memory operations also, as has sometimes been reported, valuation of non-mem unit would be even lower. The fact that Micron has to pay compensation if its share price falls below USD 35 implies that Micron will be valued at USD 21 billion in the deal (their market cap at USD 35 per share), giving Hynix shareholders a 19% stake in the post-deal Micron. The fact that Micron wants to put part of the money in escrow and fears that it may later "uncover" further debt gives proof to the state of accounting at Hynix and/or a lack of thoroughness of Micron's due diligence. From my experience, I would assume the former... :-) HOWEVER... What is really unclear to me at this point is how Hynix' debt is going to be allocated between the two units (mem and non-mem) in the deal. As summarized in my previous post (http://www.siliconinvestor.com/readmsg.aspx?msgid=17033194), after the currently ongoing restructuring Hynix still has USD 4.83 billion debt (of which USD 1.14 billion from foreign creditors). How much of this is Micron going to take over? Has anyone ever seen any info about this issue? Cheers, ohkami