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EDITIONS
 Monday, 30 December, 2002, 11:50 GMT
Rescue plan for chip giant Hynix
Semiconductors
Korea's government threatened Hynix with bankruptcy
A group of banks has voted to approve a $4bn (2.5bn) bail-out for Korea's giant computer chip firm Hynix Semiconductor.

A meeting of the company's creditors voted in favour of the package, drawn up by Deutsche Bank after an hour of talks, an official of the Korea Exchange Bank (KEB) said.

But the deal has been many months in the making with one of Hynix's leading creditors, KEB, orchestrating attempts to reach a deal among banks owed money by the firm.

Hynix decided to split itself up in May 2002 to avoid being forced into a court-appointed bankruptcy after rejecting a sale to US rival Micron Semiconductor.

Debt-for-shares swap

Analysts say the rescue plan could trigger fresh complaints from rivals Micron Technology and Infineon about unfair state aid, as most of the banks involved are state-owned.

Micron Technology has accused Hynix, the world's third largest maker of computer memory chips, of receiving unfair state subsidies and has lodged a request for sanctions with the US Commerce Department.

German chipmaker Infineon has also lodged a complaint with European Union trade officials.

Under the survival plan, Hynix's creditor banks have agreed to waive debts of 1.9 trillion won ($1.6bn) in exchange for shares in the struggling memory chip maker.

They will also reschedule the pay-back deadlines on a further 3 trillion won of debt.

Shareholders will be issued with one share for every 21 shares they own, in order to cut the number of shares in issue.

Sell-offs

Hynix is among the leading producers of DRAM (dynamic random access memory) chips, but massive oversupply over the past couple of years has driven down prices.

For months the company was negotiating with US chipmaker Micron Technologies with a view to selling it the operation for $3.4bn.

But on 30 April 2002 Hynix's board threw out the plan, which creditors had already endorsed.

Hynix's board was believed to want to hang onto the DRAM operation, selling off the rest and relying on a recovery in DRAM prices to turn the company around.

But the revival in DRAM prices has stalled since Hynix's rejection of the Micron deal, with prices slipping by as much as 20%.

Hynix announced before the creditors' meeting that it had reached agreement to sell its shareholding in display panel making unit Imagequest for 45 billion won.

The buyer is another Korean firm, corporate restructuring specialist GB Synerworks.

See also:

08 May 02 | Business
02 May 02 | Business
30 Apr 02 | Business
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06 Dec 01 | Business
03 Dec 01 | Business
09 May 02 | Business
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