Hynix Semiconductor Inc, which owes more than seven times its market value, and its adviser, Salomon Smith Barney Inc, are meeting the chipmaker's largest creditor to discuss its finances, a little more than a month after lenders agreed to reschedule more than US$4 billion of debt.
Bankers from Salomon, which helped Hynix sell shares in June so creditors would extend repayment of the debt, met the creditors to give details on its ability to keep up payments, said Lee Youn-soo, a vice president at Korea Exchange Bank, who was on his way to the meeting at the bank's headquarters.
"It's staggering to see a company get US$1.25 billion from a share sale and then a month later have to go back to its creditors," said Alain Barbezat, who helps manage US$500 million in Asia ex-Japan at Darier Hentsch Asia Ltd in Hong Kong.
Last week, Korea First Bank, which is owed 270 billion won (US$208 million) by Hynix, said creditors expected to receive an additional request for financial assistance to allow the third-largest computer memory chipmaker to continue to invest in its future. KEB said yesterday that Hynix will not need more support unless the price of the company's main product falls further.
In June, when it helped Hynix to convince investors to buy the new shares which it needed to sell before creditors would extend the debt repayment, Solomon forecast chip prices would bottom in the second half.
A month after the share sale was completed, Hynix reported a 1.3 trillion won loss in the second quarter and said demand for computer chips won't improve this quarter.
The company said it had 1.16 trillion won of cash at the end of the first half. Hynix said it had liabilities of 11 trillion won, with 7.3 trillion won of that interest-bearing debt.
It had 2.7 trillion won of debt due this year, according to research published by Salomon Smith Barney Inc. on May 18 and distributed to money managers prior to its US$1.25 billion share sale in June.
The spot price of the industry-standard PC133 8X8 64 megabit dynamic random access memory chip was at US$0.85 per chip Tuesday. That is less than half the price it costs to make them.
Hynix shares rose as much as 15 percent to 1,580 won. Its shares are down 61 percent this year.
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