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Banks decide to drop Hynix rescue package to write off US$1.1 billion

Hynix Semiconductor Inc creditors seeking to end their lending relationship with the third-largest computer memory chipmaker will write off a combined 1.47 trillion won (US$1.1 billion) of loans, main creditor Korea Exchange Bank said.

Kookmin Bank, Shinhan Fi-nancial Group, SeoulBank, Hana Bank, Koram Bank, Industrial Bank of Korea and Pusan Bank, which hold about a fifth of the company's 8.64 trillion won debt, will write off the 1.47 trillion won by exchanging the loans for bonds convertible into shares, said a Korea Exchange Bank spokesman who declined to be identified.

Korea Exchange Bank and other lenders, which have decided to continue to support the company, will exchange 2.9 trillion won of loans for shares, the spokesman said, reiterating details of an agreement signed last month.

The write-off amount was calculated based on a liquidation valuation of the company commissioned by Korea Exchange Bank.

According to the valuation, Hynix's debt is worth 25.49 percent of its face value.

The banks, which agreed to let the second multibillion-dollar bailout this year proceed but declined to offer it new loans, will be paid in exchangable bonds.

A final ratio for the swap of debt into convertible bonds will be determined according to the type of loan. A steering committee formed by Hynix's main lenders will meet to approve the proposals today.

The spot price of the benchmark 128Mb dynamic random-access memory (DRAM) chip rose 11 percent to US$1.65 Tuesday, rounding out a 60 percent surge in the last four days.

Before the gains, the price declined on all but two days since March 27, when it was almost US$5.

The slump in prices reflected the lack of demand for the chips, which provide the main memory for personal computers.

The US$30 billion industry is forecast to shrink as much as 67 percent this year as PC makers -- themselves suffering the first actual decline in sales since the 1980s -- slashed component orders.
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