Citigroup Inc will be the first foreign lender to join Korean banks in helping Hynix Semiconductor Inc stay in business with a US$3.5 billion bailout, the second rescue of the company in three months.
Citigroup's Citibank NA unit has yet to agree to the company's request that creditor banks swap three trillion won (US$2.3 billion) of its debt for shares and lend a further 500 billion won to upgrade factories. The bank arranged an 800 billion won loan for the company earlier this year, while Citigroup's Salomon Smith Barney Inc is the company's financial adviser.
"Under US banking regulations, we cannot own shares in Hynix so a debt-for-equity swap would not be possible," said YB Imm, Citibank's country risk manager in Seoul. "We could swap debt for convertible bonds" as suggested by Salomon.
Still, Citibank would prefer rolling over existing debt, rather than swapping it for convertible bonds, Imm said. He declined to comment on how much the bank is owed by the third-largest maker of computer memory chips. Korea Exchange Bank said Citibank has the largest exposure to Hynix among foreign lenders.
Citibank attended a local creditors meeting regarding Hynix on Friday, at the invitation of main creditor Korea Exchange Bank, Hynix and Salomon.
Hynix chief executive officer, Park Chong Sup is visiting the company's eight largest creditor banks accompanied by Salomon Smith Barney officials to make presentations on the bailout proposal, the company said.
The company's share rose 12 percent to 1,030 won yesterday, as local individual investors bet the banks will decided in favor of the plan. The stock recently traded at 975 won leaving it down 77 percent this year -- the worst performing stock on the KOSPI.
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