Hynix Semiconductor Inc creditors will meet next week as Korea Exchange Bank, the company's biggest lender, tries to put the chipmaker's 7 trillion won (US$5.4 billion) bailout back on track.
Korea Exchange asked banks to attend the meeting set for Oct. 4, said Lee Tae-kyun, a bank official. All creditors, including banks and other lenders, must disclose how much of the company's debt they hold, Lee said. The bank is trying to get other creditors to approve a new 500 billion won loan for the third-largest computer memory chipmaker, which has been selling its main product at below the cost of production since May. Some creditors are threatening to derail the bailout, the company's second rescue in three months.
``We're still unwilling to provide new loans as things stand,'' said Oh Yong-kook, chief credit officer at Shinhan Bank.
``If the company can prove its viability then we may be willing to discuss new loans: it hasn't managed to convince us yet.'' At a meeting of creditors earlier this month, banks agreed to exchange 3 trillion won of Hynix debt for bonds they can later convert into the company's shares. Korea Exchange was forced to separate the new loan from the whole package after banks baulked at lending the company more money.
Other parts of the package, including repayment extensions and the sale of new shares, hinge on banks approving the loan.
Korea Exchange yesterday raised the stakes by saying it may increase the amount of new loans it is trying to get approved as terrorist attacks on the US have worsened the outlook for the US$30 billion memory chip industry.
Without the bailout, Hynix may struggle to survive as it tries to keep up payments on 7.3 trillion won in debt -- eight times its market value -- and upgrade factories so it can keep up with competitors.
Hana Bank is still unwilling to provide the company with new credits, said Lee Nam-yong, who heads the bank's credit division. At a meeting on Sept. 14, creditors asked the company and KEB to come up with a forecast about when they expect the memory chip market to rebound from its worst collapse. Recent events may have made that recovery harder to predict, KEB said.
``The terrorist attacks will obviously result in a delay in the recovery of chip prices,'' Chung Hyung-ryang, head of the corporate credit division at KEB. ``As such, we will likely be asking for more fresh loans than the proposed 500 billion won.''
Sales of dynamic random access memory chips are forecast to fall as much as 40 percent this year. The spot price of the industry-standard PC133 64 megabit fell 1.4 percent yesterday to US$0.70, less than half the US$1.50 that analysts estimate the chips cost to make.
Korea Exchange can make the package binding on all creditors using laws that came into effect two weeks ago if those holding three-quarters of Hynix's debt agree to a proposal.
RSS