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Technology Stocks : Amkor Technology Inc (AMKR) -- Ignore unavailable to you. Want to Upgrade?

To: tech101 who wrote (174)	4/22/1999 11:12:00 AM
From: tech101	Read Replies (1) \| Respond to of 1056

At long last, Korean chip merger might become reality A service of Semiconductor Business News, CMP Media Inc. Story posted 10:15 a.m. EST/7:15 a.m., PST, 4/22/99 By Jack Robertson SEOUL, South Korea -- Hyundai Electronics Industries Co. here said today that it has reached an agreement on a price -- reportedly $2.1 billion -- to acquire LG Semicon Co. A Hyundai spokesman told Semiconductore Business News that a few details remain to be ironed out, but the long-stalled merger could be completed by the end of the week. The Korean government's Financial Supervisory Commission told the Korean press that the chairmen of the parent Hyundai Group and LG Group are expected to sign the chip deal this weekend. One issue remaining is the schedule of Hyundai's payment to LG for a 60% controlling interest. The remaining 40% of LG Semicon stock is publicly held. Sources said Hyundai has offered to pay $1.25 billion in cash and securities by June 2000, and the remaining $900 million in installments to be completed by December 2002. The Hyundai Group today also announced it will embark on a sweeping sale of non-core business units, which sources said was partially to pay for the LG Semicon acquisition. The Hyundai asset sale also is a response to intense government pressure for the chaebol to divest losing affiliate operations. On Monday, the Daewoo Group announced a broad cutback in operations that was thought to put extra pressure on Hyundai to follow suit. Analysts said it was also pressure from an exasperated Korean government that finally broke the logjam in the Korean chip merger agreed to in principle back in September (see Sept. 3, 1998 story). The government last week threatened to throw the parent Hyundai and LG chaebols into "financial workout procedures" -- the Korean equivalent of pre-bankruptcy proceedings -- if they didn't work out the merger, which was supposed to have been completed by the end of 1998. Hyundai then increased its price offer to LG by nearly $1 billion, opening the way to conclude the languishing deal, sources said. The resulting merger could create one of the largest DRAM producers in the world, with a potential combined global market share of more than 20%. However, Hyundai and LG have very different chip designs and production processes, which will likely be a major challenge to harmonizing the disparate operations. Another big hurdle is the large combined debt that the merged chip entity inherits. Analysts estimated the debt of the two chip firms would total more than $10 billion. One possible avenue to cut the debt is for the domestic Korean banks to convert their large loans to non-voting equity stock, similar to the relief in the financial restructuring of troubled Anam Semiconductor Co. FISHBACK HERE? However, Micron Technology Inc. and the U.S. Semiconductor Industry Association are adamant in opposing any debt-for-equity swap in the chip merger. Steve Appleton, chairman of Boise, Idaho-based Micron, has charged that such relief would violate a U.S. law passed last year barring IMF rescue funds to Korean banks from bailing out that country's chip companies. 204.247.196.14