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Last updated: September 6, 2005 5:30 pm

Hynix sale managers appointed

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Creditors of Hynix Semiconductor on Tuesday speeded up the process of offloading shareholdings in the Korean chipmaker by appointing seven lead managers to handle the $2.3bn deal.

Creditors, who own 73.8 per cent of Hynix, plan to sell a 22.8 per cent stake or 105m shares as early as next month in order to recoup part of the $4.6bn they injected through a series of controversial bail-outs in 2001 and 2002.

Four foreign investment banks – Citigroup, Merrill Lynch, Deutche Bank and Credit Suisse First Boston – and three domestic brokerages – Daewoo Securities, Goodmorning Shinhan Securities and Woori Investment & Securities – will jointly manage the stock sale.

“We plan to sell the stake to local and overseas investors as soon as possible,” main creditor Korea Exchange Bank said.

People close to the company expected the stock sale to be “well received” by investors, given the chipmaker’s successful turnround.

Hynix was kept afloat by financial support from state-backed banks after it the company was pushed to the brink of bankruptcy during the semiconductor industry’s meltdown in 2001. But it the chipmaker has made a strong comeback, helped by tough restructuring and improved market conditions, and posted a record profit of Won1,700bn ($1.66bn) last year.

It has become one of the most cost-efficient chipmakers, in spite of several years of under-investments due to financial problems. It overtook Micron Technology of the US as the world’s second-biggest memory chipmaker in the second quarter, with a 16.4 per cent market share, according to iSuppli, the market researcher.

“The stock sale will draw a lot of interest as the company has become a fundamentally strong. company. It has a fine balance sheet and has no default risks,” says Michael Min, an analyst at Korea Investment & Securities. “It is now a top-tier company in terms of profit margins and market share.”

Hynix got back on its own feet in July by completing a debt restructuring programme, a year and a half earlier than planned. It refinanced its debt by successfully raising $1.25bn in loans and bonds, freeing it from management by its creditors.

The company suffered a drop in second-quarter profit, as memory chip prices tumbled amid a supply glut. But profitability is likely to improve in the current quarter and the next with chip prices rebounding on strong seasonal demand.

Shares in Hynix closed down 4.4 per cent at Won22,000 on Tuesday because of the planned stock sale, but the stock is expected to be the best performer in the industry for a second year.

Creditors plan to sell the remaining 51 per cent stake in 2008 once the lock-up period ends at the end of 2007. But they are willing to divest their investments even before 2008, if a strategic buyer emerges.

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