Creditors approve bailout for chip giant Hynix

 

Creditors today approved a new rescue package worth some $1.6 billion for ailing Hynix Semiconductor Inc. in a controversial deal to keep the world's third largest memory chip maker afloat.

Main creditor Korea Exchange Bank (KEB) said the bailout was endorsed by 86.5 per cent of votes during a meeting of 114 creditors. It includes a debt-for-equity swap worth 1.9 trillion won ($1.58 billion), a share writedown and the rescheduling of loans.

"It would help Hynix normalize its operations and put the company in a better position to negotiate its sale in the future," said KEB vice president Mr Hwang Hak-Joong.

The new bailout package was approved as originally proposed by KEB. It offers a 21-to-one share writedown and a three year extension of the maturity of three trillion won in debt.

KEB said it expected the latest rescue package to help Hynix cut its debt-to-equity ratio to 71 percent from the current 146. But Hynix, which has been kept alive with a series of bailout packages, has been sparking criticism from foreign rivals who claim the bailouts amount to hidden subsidies.

Some analysts have questioned the wisdom of efforts to keep Hynix going, saying the company should be shut down or forced to sell its chip-making business to a foreign investor.

The US International Trade Commission (ITC) said in a preliminary ruling this month that the US chip industry was hurt by imports of Korean chips.

he ITC move followed a suit by US giant Micron Technology, which claimed South Korean chip shipments had been subsidized through government-controlled banks.

AFP