Creditors to Review Additional Support of 2~3 Trillion Won for Hynix

After reviewing a bailout plan with a total 6.7 trillion won support fund, creditors of Hynix Semiconductor Co. is deciding today whether they will approve the plan. However, it is uncertain whether they will pass the plan due to lack of a specific restoration strategy and not enough scale of the fund.

For this reason, a different plan has been brought up, in which the actual third obligation adjustment deadline is advanced by adopting a different method of the obligation adjustment, such as an additional investment of 2 ~ 3 trillion won through a debt-equity swap, and more investment on new facility.

The Korea Exchange Bank (KEB), a main creditor bank, announced yesterday that they will bring up a bailout plan including a debt-equity swap of 3 trillion won. If the plan dose not pass, they plan to get the approval on the obligation adjustment plan by applying the reconstruction acceleration law to take effect from Sept. 14.

The bailout plan includes a debt-equity swap of 3 trillion won, converting of 370 billion won, which is to repay the corporate bond, to operating cost, and renewing of the deadline for 1.72 trillion won loaned by investment trust companies and leased companies.

It seems to be possible for the creditors to approve the bailout plan based on cooperation by non-bank financial institutions such as investment trust companies, or to reject the plan to adopt a different obligation adjustment method. Yet, since the key-holding investment trust companies are opposing the plan to protect their customers, a court receivership is inescapable unless an agreement between creditors is made.

Chung Keun-Yong, chairman of the Korea Development Bank (KDB) made it clear by saying, ``We will not support Hynix, unless the three principles are kept, which include, when a clear bailout plan is made, when a fair loss distribution is made, and when a decision making is done based from a viewpoint of creditors.``

Meanwhile, a high official of the Financial Supervisory Service said, ``If all the allowance for bad credit by banks are added to the insolvent obligation (80 percent), there will be an additional loss of 1.1 trillion won for the banks, and 1.9 trillion won for other financial institutions.``

nirvana1@donga.com