Hynix Goes for Debt-Equity Swap of 4 Trillion Won

The controversial measures to support Hynix Semi-Conductors were finally approved by the creditor group yesterday.

Consequently, Hynix manages to overcome the second crisis of liquidity caused by the plunge of the semi-conductor price in the international market. However, the aid measures could be approved only by the drive of major creditor banks, leaving aftermath controversies about the measures.

Hynix creditors held a general meeting at the Headquarters of Foreign Exchange Bank yesterday and decided the measures to normalize the management of Hynix including debt-equity swap of 4 trillion won and new investment of 1 trillion won.

The banks that would not invest will withdraw from the creditor group after receiving convertible bonds (CB) equal to the liquidating value. In other words, if the result of the business survey, which will come out mid-November, reveals that the liquidating value is 20 percent, 80 percent of the debt will be written off and 20 percent of the debt will be invested by debt-equity swap.

Kookmin, Korea Housing, Shinhan, Hanmi, Hana, First, and Seoul Banks expressed that they will not participate in the support of Hynix.

A high official of a bank said, ``We could not help but agreeing on the measures since receiving stocks would be better than holding corporate bonds with 5 year of maturity.``

Since many banks withdrew from the additional support, the real fund supplied to Hynix is likely to be about 650-700 billion won.

The investment trust firms agreed to renew holding corporate bonds of 1 trillion 250 billion won for 3 years with 6.5 percent APR and to extend the term of lease bond of 510 billion won for one and half years.

As a result, the announcement of default against Hynix is not likely to happen at the foreign financial organization meeting on Nov. 8.

nirvana1@donga.com