Hynix Semiconductor Inc's investment trust creditors will propose changes to a US$4 billion bailout drawn up by the company's bank lenders, seeking to minimize losses from a third rescue of the world's third-largest maker of computer memory chips in two years.
Representatives from 15 investment trusts plan to present to creditor banks as early as today their terms for swapping 1.9 trillion won (US$1.6 billion) of debt for equity, which will include changes to swap price and sale restrictions.
"If creditor banks don't incorporate our proposal, the bailout package won't be easily approved," said Lee Myung Jae, who oversees Hynix debt at Korea Investment Trust Management Co, which is representing investment trusts.
The fate of the chipmaker depends on creditors passing a proposal by main lender Korea Exchange Bank and adviser Deutsche Bank AG to swap debt and delay payment on a 3 trillion won more of debt to 2006 from 2003-2004. Hynix needs its US$5 billion debt burden eased to survive and develop products to compete in the US$11 billion memory-chip industry.
Creditor banks need approval from lenders that own more than 75 percent of Hynix's 5 trillion won interest-bearing debt to pass the bailout. Investment trusts hold about 1.2 trillion won of the debt, mostly non-guaranteed bonds. Creditor banks own 67 percent of the South Korean computer memory chipmaker.
"If creditor banks accept terms set by investment trust, they may have to face similar demands by individual investors, which would create a lot of trouble," said Chung Chang Won, an analyst at Daewoo Securities Co. "It won't be easy for creditor banks to make leeway."
Phone messages left with officials at Korea Exchange Bank and other main lenders weren't returned. Analysts were divided on whether investment trusts would win concessions after creditor banks dismissed similar demands in the earlier bailouts.
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