Hynix Semiconductor Inc workers yesterday rejected an accord with Micron Technology Inc and threatened a strike to stop the US company taking over Hynix.
The union threat created a new obstacle to Micron's ambitious bid to become the world's biggest memory chip maker in an industry dominated by South Korean firms.
The union accused creditors of failing to secure a full guarantee on job protection.
"We will stage an all-out strike if the government and creditors go ahead with the sale," the Hynix union declared in a statement. The union claims 10,000 of Hynix's 15,000 employees as members.
Labor leaders said they would join "all other organizations related to Hynix" to foil the sale. The company's contractors have 150,000 workers. Minor shareholders promised to support the union.
Workers accused the government of giving in to Micron demands to complete the deal for political reasons ahead of key elections this year. Under a non-binding accord announced Monday, Micron agreed to buy Hynix memory-chip operations with 108.6 million Micron shares and to pay US$200 million for a 15 percent stake in the South Korean company's non-memory business.
The union claims the real takeover price would be lower than the US$4 billion reported by creditors due to falls in the value of Micron shares.
Creditors said the US company also promised to keep 85 percent of Hynix memory-chip workers for two years.
Yonhap news agency, however, said Micron had insisted at least 85 percent of Hynix memory chip workers approve the accord as a condition for signing the contract.
The accord also called for the creditors to set aside 14.28 million Micron shares in a special account to cover hidden debts the US company may find after its takeover, Yonhap said.
Micron barred Hynix from being involved in independent memory chip operations for seven years, it said.
Yonhap quoted a Hynix restructuring committee official as saying creditors withdrew a request for a payment guarantee for fresh funding and accepted an interest rate limit of 5 percent to 6 percent demanded by Micron.
South Korean lenders would provide US$1.5 billion of long-term finance for use by Micron in its Korean operations.
The deal also prevents creditors selling Micron shares for four months after the accord is finalized, Yonhap said.
The accord requires approval by Hynix creditors and the boards of Hynix and Micron by April 30. Major creditors are to meet on Saturday amid concerns some small banks and investment trusts are reluctant to endorse the accord.
South Korean financial officials believe Hynix will collapse without a nearly injection of foreign capital.
The union, however, insisted the world's third largest maker of dynamic random access memory chips could survive independently.
Hynix has been kept alive with two multi-billion dollar bailouts from creditors. It has debts estimated at more than six trillion won (US$4.5 billion).
The company posted a net profit of 35 billion won in the three months to March. It was Hynix's first quarterly profit in 15 months and the company said it could maintain profits this year.
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