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Hynix Semiconductor and its creditors on Sunday completed a Won1,400bn ($1.5bn) stock sale, as creditors seek to recoup their investment in the world’s second-largest memory chipmaker.
They priced about 54m existing and new shares at a smaller-than-expected discount of Won26,500 each, splitting the shares evenly between foreign and domestic investors.
Of the 43m shares held by creditors, about 16m shares were sold in global depositary receipt while 27m shares were sold in domestic block trade. Hynix also raised $300m by issuing about 11m new shares overseas in GDRs.
The company will use the proceeds for capacity expansion as it tries to make up for years of under-investment through aggressive capital expenditure.
“The global share sale by Hynix proves its corporate worth while helps it raise investment funds necessary to remain competitive,” main creditor Korea Exchange Bank said.
The stock sale has been expected for months as the share price has surged about 50 per cent since last October, when creditors sold about a third of their initial 73.8 per cent stake. But the price has been flagging recently due to concerns of a stock overhang.
The South Korean company has made a strong comeback, since creditors saved it from bankruptcy with a $4.6bn bailout in 2001-02. The stock sale will reduce creditors’ stake to about 40 per cent.
Seven lead managers including Merrill Lynch were selected last month for the deal.
Hynix completed its debt-workout programme last July, and posted a record profit of Won1,700bn last year. However, it saw an 8.6 per cent fall in first-quarter profit due to steep price declines of flash memory chips.
After years of paying down debt rather than investing in production, Hynix is now focusing on building production facilities to boost competitiveness. Capital expenditure of Won3,600bn is planned for 2006, including Won1,300bn for its Chinese plant.