A Citigroup Inc private equity unit will buy Hynix Semiconductor Inc's non-memory chip business for 954 billion won (US$820 million) after the chipmaker's creditors accepted a raised bid, Hynix creditor officials said.
Lenders holding more than 75 percent of Hynix's voting rights accepted Citigroup Venture Capital Equity Partners LP's offer, after earlier rejecting a bid of about 750 billion won, said the officials, who spoke on condition they not be identified.
Citigroup will pay about two-thirds in cash and the rest in assumed debt, one of the officials said.
Citigroup is buying the unit, which makes chips for flat-screen displays and camera-equipped mobile phones, amid a boom in the industry, with market researcher Gartner Inc forecasting a 30 percent rise in semiconductor sales this year. The proceeds will help Hynix pay some of its 4.2 trillion won debt and invest to keep up with memory-chip rivals such as Samsung Electronics Co and Micron Technology Inc.
"The sale will help Hynix turn itself around in a more positive manner as the money will probably help it repay debts and invest in facilities," said Yang Jun Won, who helps manage the equivalent of US$172 million at Macquarie-IMM Investment Management Co in Seoul.
Under the agreement, which comes more than a year after talks began, Citigroup Venture Capital will get 379 billion won in loans from Hynix's creditors to finance the purchase, one of the officials said. Hynix will also get the option of buying a stake in the non-memory business, the official said.
Korea Exchange Bank, Hynix's biggest shareholder, was scheduled to announce the deal yesterday after the markets close in Seoul, one of the officials said.
Hynix's board will vote on the proposal this week and an agreement may be signed next week, the officials said.
"Korea Exchange Bank is in the process of gathering opinions from the rest of Hynix's creditors," said Lee Nahm-yon, a spokeswoman for Korea Exchange Bank. She declined to comment further.
The sale also means Hynix may post an extraordinary gain of about 400 billion won this year because it assumed the non-memory business would be sold for 540 billion won when it booked losses of 1 trillion won last year on one-time items.
This year, Hynix, which earned record net income of 351 billion won in the first quarter, will earn group net income of about 600 billion won, Hynix chief financial officer Chung Hyung-ryang said in February. The non-memory business accounted for 17 percent of Hynix's first-quarter revenue.
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