The main creditor of Hynix Semiconductor Inc plans to meet key lenders to discuss ways to resolve liquidity problems for the third-largest maker of computer memory chips amid falling chip prices, Yonhap News said.
A meeting of key creditors may take place this week to allow lenders to discuss a new aid package that will include loans, a debt-for-equity swap, interest-rate cuts and debt extensions, Yonhap said, citing unidentified creditor officials.
A spokesman for main creditor Korea Exchange Bank said no meeting has been scheduled for this week. Officials also declined to specify whether a financial aid package was being drawn up.
Unless chip prices recover, Hynix may run through the proceeds of a US$1.25 billion share sale raised in June. The spot price for the PC100, 8X8 64Mb DRAM -- widely used as an indicator of demand -- has fallen 71 percent so far this year.
According to calculations by Salomon Smith Barney Inc, which arranged the US$1.25 billion share sale for the company, Hynix will have a shortage of 1.5 trillion won (US$1.2 billion) of cash in the second half of the year if chip prices fall to an average of US$1, Yonhap said. The report did not specify the time period for the average chip price. The price for that chip has fallen to an average of US$0.80, according to the DRAM Exchange Web site.
Hynix's long-term rating outlook was cut to "negative" from "stable'" last week by Standard & Poor's, which cited "worsening prospects" for the company amid "a severe market downtown in the company's mainstay dynamic random access memory business." The company said last week it lost 2.1 trillion won from January through June. That further dents its ability to keep pace in the US$30 billion-a-year DRAM chip business, where rivals such as Samsung Electronics Co spend as much as five times more than Hynix on improving output.
The company said earlier this month it had liabilities of 11 trillion won, with 7.3 trillion won of that being interest-bearing debt.
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