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

To: Duker who wrote (27457)	12/29/1998 9:37:00 AM
From: blake_paterson	Respond to of 70976

The Koreans just can't seem to get it together... Banks cut credit to S.Korean chipmaker LG dailynews.yahoo.com Monday December 28 3:16 PM ET SEOUL (Reuters) - Creditors of South Korea's LG Semicon Co agreed unanimously on Monday to freeze fresh loans to the chipmaker after it objected to the terms of its planned merger with Hyundai Electronics Industries Co. They also agreed to hold further discussions on whether to call in existing loans, the president of LG Semicon's main creditor, Commercial Bank of Korea, told reporters. ''Creditors decided to suspend fresh loans to LG Semicon because the company was not cooperative in the proposed merger, ''said Bae Chan-byung, president of Commercial Bank of Korea. Bae did not comment on the possibility of litigation. LG Semicon president Koo Bon-joon said on Sunday his company had decided to sue U.S. consulting firm Arthur D. Little (ADL) over a ''distorted and unfair'' assessment of the merger. ADL last week said Hyundai should have management control of the merged firm, which would become the world's second- largest manufacturer of dynamic-random-access memory chips. The companies had earlier agreed to let Boston-based ADL decide who would take control of the merged company. President Kim Dae-jung said in a statement on Monday he hoped LG Semicon would implement the agreement between the government, the businesses and the financial community. The government has said that if the assessment is not followed, those responsible for the violation could face financial penalties The planned merger has become a symbol of a government-led drive to restructure the country's highly leveraged corporate sector and ease overcapacity in key industries. Corporate analysts said LG Semicon's move was aimed at securing a better negotiating position in future discussions on the merger and in other business swaps. ''I don't think LG has the guts to fight with the government, ''said Lee Jae-hyok, analyst at Daiwa Securities. ''It simply wants more time.'' LG Semicon may want to take over Hyundai's non- semiconductor division at a cheaper price in return for ceding management control of the merged company, analysts said. Hyundai has said it would spin off its non-semiconductor businesses, such as telecommunications and monitor production, to focus solely on chip production. LG Semicon also wants to strengthen its position in the merged company by proving that it is not as inferior to Hyundai as the consulting firm's report suggests, analysts said. ''The consulting firm's assessment is not entirely convincing. There will be some areas that need to be fixed,'' said Shim Yong-jae, analyst at Indosuez W.I. Carr Securities. Analysts said LG Semicon had to repay 1.1 trillion won ($911 million) in 1999 out of about 7.5 trillion won of debt plus 1.35 trillion won in 2000 unless its creditors rolled over loans. ($1 - 1,207 won)