Hynix Semiconductor Inc boss Park Chong-sup and his advisers Salomon Smith Barney Inc are visiting the company's local creditors trying to persuade them to roll the dice one more time.
Should they not back the company's latest multi-billion dollar bailout, its second in three months, and decide to liquidate it, Park is telling them they may sell the company for 6.5 trillion won (US$5 billion), almost half its debt, if they can find buyers. That's a big "if," according to presentations made to creditors outlining the company's finances and outlook.
PHOTO: AP
After agreeing to extend repayment on more than US$4 billion of debt in June, creditors may have little choice but to agree to its latest request for help given there would be few buyers of its assets if broken up. This time Hynix wants about US$5.4 billion in debt extensions, write-offs in exchange for equity and new loans.
Shareholders are also being asked to buy more stock.
"If you owe the bank a million bucks and you're in negative equity you're in trouble," said Ian Beattie, who helps manage US$2.5 billion globally for New Star Asset Management in London.
"When you owe them as much as Hynix does, they're in trouble." Hynix, which owes interest bearing debt about seven times its market value, wants shareholders to buy one trillion won of new shares, creditors to buy three trillion won of bonds convertible into its stock and to extend repayment on 2.1 trillion won of debt, it said in a 28-page presentation shown to banks.
The company also wants to refinance 410 billion won by selling debt publicly with a guarantee from a third party and a new 500 billion won loan, in a package worth up to seven trillion won.
Korea Exchange Bank said earlier this week the company needed support amounting to about 4.5 trillion won. Korea Development Bank, another large creditor, and other banks have already indicated they won't provide the company with new funds though would consider extending repayments.
If they don't and the company is liquidated its assets will be put up for sale to recoup their loans.
Rather than looking to increase capacity most chipmakers are cutting costs, conserving cash, and waiting for prices to rise, so buyers are likely to be thin on the ground, Hynix says. The third-largest memory chipmaker has been on life-support from banks since chip prices fell to below cost earlier this year.
"The risks would be substantial" if creditors tried to sell the assets, the presentation says. Instead investors should focus on keeping the company in business for the "best prospect of recovering the full value of the debt." The company claims creditors should bet on Hynix, estimating its "firm value," or market value plus net debt, could rise to as much as 20.8 trillion won once the industry recovers. No time frame was given.
Analysts say Kim can't afford for Hynix, which employs about 14,000 people and accounts for 4 percent of the country's exports, to fail. They also say the banks can't afford to write off the money owed to them.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from