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To: mishedlo who wrote (211833)	12/30/2002 12:56:35 PM
From: JHP	Respond to of 436258

Bullish Creditors Extend Life of Ailing Korean Chip Maker Hynix By DON KIRK outh Korea's most problematic major company, Hynix Semiconductor, won another reprieve today with creditor approval of a $4 billion plan to keep it alive despite intense international pressure to let it die. The target of legal action by both Micron Technology of the United States and Infineon Technologies of Germany, Hynix survived on the basis of a plan by creditors led by the government-controlled Korea Exchange Bank. The creditors took over Hynix in June after the company's previous board rejected a proposal by Micron to buy it for about $3 billion. Advertisement Still hoping to prepare Hynix for sale, creditors rolled over $2.4 billion in debts and agreed to exchange another $1.6 billion of debt for equity. Hynix's overall liabilities have soared well above $6 billion despite two previous rescue plans in the last two years that have kept the company the world's third-largest producer of memory chips, behind Samsung Electronics and Micron and one notch ahead of Infineon. Hwang Hak Joong, a vice president of Korea Exchange Bank, said the company's creditors believed the latest exercise in debt restructuring would put creditors in a better position to sell the company eventually. The creditors reluctantly approved the plan after battling opponents within the group who had said their institutions would not advance more funds to the company, once a core member of the Hyundai group. Needing approval of creditors holding 75 percent of the $6.25 billion in acknowledged Hynix debts, Korea Exchange Bank, as lead creditor, won assent from those holding 86.5 percent. But the plan provides no additional financing for research and development needed to keep up in a fast-evolving field. The company's total liabilities, including hidden debts that may surface in a due diligence process, are believed to be considerably higher than the amount that is publicly known. The company's financial difficulties are viewed as one of the reasons why several major banks, notably Chohung Bank and the two banks that merged to form Woori Bank, as well as the Korea Exchange Bank, fell under government control during the Korean economic crisis of 1997 and 1998. The latest plan for Hynix's survival was expected to draw sharp criticism from both Micron and Infineon. In complaints filed with the United States Department of Commerce and the European Union, Micron and Infineon asserted that Hynix could not have remained in business without substantial government subsidies, notably huge infusions of credit by government-controlled banks. Micron has also charged that the effort to keep Hynix alive has been a factor in driving the price of memory chips below what it costs to produce them and has been a central reason why Micron has suffered severe losses. The Micron complaint also encompasses Samsung Electronics, which prospers as one of Korea's most successful firms largely on the basis of a wide range of other electronics products. With little if any prospect for finding a buyer for the entire company, Hynix has been shedding assets for the past two years. In what appeared to be a gesture to smooth over ruffled feathers, the company announced before the creditors' meeting today that it would sell its 47 percent share of ImageQuest, a flat-panel manufacturer, for $37 million to GB Synerworks, also a Korean company. In their eagerness to unload portions of the company, Hynix creditors have extended additional credit to buyers. BOE Technology Group of China is taking over the company's liquid-crystal display unit for $380 million, much of it advanced by major Hynix creditors.

To: mishedlo who wrote (211833)	12/30/2002 2:04:44 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 436258

excellent article on the pension situation. i believe this will be an incredible disaster that will eventually take the SPX below 400. there is a lot of reflexivity: high pension-return assumptions keep pro forma earnings high, which keeps the market PE high. but as the market continues its breakdown, increasing amounts of earnings will go to pension funds, which will increase the PE even as the market falls. the falling market will further increase pension funding requirements and further lower PEs in a vicious circle. hence the increasing reliance on pro forma accounting lies to keep the public on script in believing that stocks are for the long run. in order to avoid dragging this out for many years, Congress should force the scumbag CEOs to mark pension returns to market and reduce return assumptions to 4-5% range (which is still too generous except for an all-bond pension portfolio, due to severely negative expected forward returns on US equities). this will lower the SPX to 350 where it belongs, but probably save trouble in the long run. for one thing, the pensions won't have to throw so much good money after bad, which they have done the past several years and will likely continue doing over the next decade unless the stock market is abruptly adjusted to a reasonable price level. unfortunately, too many scumbags in high places would not benefit from such a sea change, so they will prefer temporary bandaid solutions until they are retired and off the hook. this means there will be many billions more wasted in the years ahead. the other huge, fundamentally unsolvable problem with stock heavy pensions in general is that they will all become net sellers at the same time, meaning nobody will be around to buy their shares when they need to sell in 2010 through 2030. it is mathematically impossible for pensions in the aggregate to achieve the returns they forecast, since 90% of those returns must come not from dividends, but from selling stocks in the future at higher prices to future buyers. but demographics show the buyers will be overwhelmed by the sellers. thus i expect the US market will be lower in real terms 30 years from now compared to today. aside from those caveats, though, i'm really bullish on the market!