Creditors set to move ahead with aid package for Hynix
Creditors set to move ahead with aid package for Hynix
SEOUL (AFP): South Korean banks are ready to push ahead with a
new rescue package for Hynix Semiconductor Inc. despite haggling
over how to avert the collapse of the stricken microchip giant,
reports said Sunday.
Yonhap news agency quoted unnamed bank officials as saying the
package would focus on the conversion of three trillion won
(US$2.35 billion) of Hynix debt and convertible bonds into equity
to raise the company's paid-in capital.
Creditors are to meet Monday to approve or reject the 6.7
trillion won debt-rescheduling package drawn up by the Korea
Exchange Bank and other state-controlled banks.
Pressure is on the banks to save the world's third-largest
memory chip maker, which employs 15,000 people and accounts for
4.0 percent of South Korea's exports each year.
But minor creditors and shareholders have been reluctant to
approve the new package mainly due to concerns over capital
reductions and a rights issue.
Investment trust companies which were badly burned by the 1999
collapse of the Daewoo Group also oppose the package, and foreign
banks are concerned about the company's debt estimated at 12
trillion won.
Foreign and local investors have dumped Hynix shares as the
chip-maker is widely viewed as having no future.
Finance and Economy Minister Jin Nyum has threatened to put
Hynix into court receivership if creditors fail to agree a second
major rescue in three months.
Receivership would mean freezing all debt repayments. Hynix
has to pay 1.23 trillion won in principal and 469 billion won in
interest in the second half of this year.
But Hynix's chief executive, Park Chong-Sup, warned last week
that creditors would see the value of their loans to Hynix fall
sharply if they put the company under court receivership.
Hynix needs at least 1.1 trillion won in fresh capital, Park
said, adding creditors would not require the company to write
down its equity in return for converting its debt into equity.
"There should be no capital write-down," as a condition for
the debt-for-equity swap, he said.
The new aid package is made up of 5.2 trillion won from
financial institutions and 1.5 trillion won from state
institutions Korea Credit Guarantee Fund and Korea Export
Insurance Corp.
Investment trusts have been asked to roll over 1.2 trillion
won of unsecured three-year bonds, which start maturing in
August, for another three years, and to halve the bonds' yield.