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Fri, Nov 28, 2003 - Page 12 News List

Citigroup bidding for one-fifth of Hynix's operations


Citigroup Inc offered to buy businesses that account for a fifth of Hynix Semiconductor Inc's sales from Korea Exchange Bank and other creditors that helped bail out the world's third-largest memory-chip maker, an official at the Seoul-based bank said.

Citigroup, the world's largest financial services company, bid for non-memory-chip operations that include chips for digital cameras, flat-screen displays and rice cookers, said Byeon Dong Hee, who heads the Hynix team at Korea Exchange Bank.

Creditors of Hynix are raising funds to recoup some of the company's US$3.8 billion of debt. Citigroup may seek to sell the business on for a higher price, according to analysts including Suh Do Won.

Boise, Idaho-based Micron Technology Inc valued the whole business at US$1.3 billion when it bid for a 15 percent stake in the operation in April last year.

"The non-memory chip operation could yield a profit as early as next year," said Suh, an analyst at Korea Investment & Securities Co. "Hynix may find a better buyer than Citigroup, if the price tag is just US$600 million."

Hynix, brought to the brink of bankruptcy in 2000 by 11.5 trillion won of debt, is benefiting from signs that consumers and companies are replacing computers, ending a slump in chip sales.

Hynix reported its first profit in six quarters in the three months ended Sept. 30, largely because of higher chip prices.

Seoul-based Hynix's non-memory operations accounted for 18 percent of sales in the third quarter.

The sale is part of a restructuring announced after the company's board rejected Micron's bid for the whole company last year.

"We're hoping to wrap up the deal by the end of the year," Korea Exchange Bank's Byeon said in a phone interview. "It's too early to discuss the price."

"Creditors will want to sell the company's non-memory chip division, when there is a buyer available," he said.

Korea Investment is also a Hynix creditor.

"Hynix could also use the cash to invest in its memory chip businesses," Byeon said.

Hynix put a price tag of 1 trillion won (US$831 million) on its non-memory chip division at the end of June, according to Suh.

Hynix expects to invest about 800 billion won into its memory and non-memory divisions combined -- it didn't have a breakdown for the memory-chip division.

In August, Hynix said it was considering the sale of the division to raise cash and pay debt. Talks with an investment unit of Citigroup started that month, according to an Aug. 14 report in the Dong-a Ilbo newspaper.

Citigroup sought to acquire the unit and then resell it after a restructuring, the Financial Times reported on Sept. 2, citing unidentified analysts.

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