Hynix Semiconductor Inc creditor banks met yesterday in an attempt to break the impasse in a planned US$6 billion bailout of the third-largest maker of computer memory chips, Korea Exchange Bank said.
Hynix's largest creditor and 17 others met to discuss new terms KEB proposed Monday, said Chung Hyung-ryang, the head of the bank's credit division. Those included allowing banks blocking the bailout to cease being creditors by swapping debt for equity, removing an obstacle to the plan.
"The banks are trying to narrow differences" ahead of a general meeting of 104 creditor institutions tentatively scheduled for today, Chung said. He said that meeting may be delayed because of disagreements among creditors.
Creditors are being asked to lend more to Hynix, struggling with 8.6 trillion won (US$6.6 billion) of debt and losing money making chips that sell for less than they cost to make, or to write off 70 percent of their loans and swap debt into shares at three times their price. The bank needs the agreement of creditors holding 75 percent of Hynix debt to force through its proposal and wants lenders blocking the plan to agree or pull out. Hynix is asking creditors for 1 trillion won of new loans and to convert 4 trillion won of debt into equity.
Some banks claim the write-off and debt-for-equity swap is too harsh. Kookmin Bank is protesting that the write-offs should depend on the quality of the debt creditors hold.
"We can't walk away from good collateral," said Lee Deuk-young, a Kookmin credit officer. "The pricing of the debt has to differ from bank to bank, depending on the type of debt they hold." More than a third of Kookmin's 409.7 billion won of Hynix debt is backed by collateral. Kookmin has the added task of unifying its stance with H&CB as the two will officially merge Nov. 1, creating Korea's largest commercial lender.
H&CB, which said it is "positively reviewing" the opt-out plan, has 172 billion won of Hynix debt, mostly in the form of credit loans.
Creditors planning to support Hynix, such as Hanvit Bank and Chohung Bank, are taking a hard line against the lenders blocking the bailout.
"If they don't want to participate, they have to write off a more significant portion of their loans," said Hong Chil-sun, chief credit officer at Chohung, which holds 732.8 billion won, or 8.5 percent, of Hynix debt.
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