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Hynix Semiconductor, the world's second-largest maker of memory chips, on Tuesday completed its debt work-out programme, freeing it from management by its creditors 18 months early.
This will enable creditors, led by Korea Exchange Bank, to sell more than $2bn in shares by the end of the year and will allow Hynix to focus on improving competitiveness. “The exit will create a meaningful start for Hynix,” Woo Eui-jei, Hynix president, said in an e-mail to employees. Hynix's completion of its debt restructuring marks a significant recovery for the South Korean company, which was on the brink of collapse under a mountain of debt after the chip industry slump in 2000-2001.
Hynix has since been under creditor management and the rescheduling of its Won4,900bn ($4.7bn) debts was due to take until the end of next year.
But the company returned to profit last year, helped by cost-cutting efforts and the disposal of non-core assets. It reported net profits of Won1,692bn in 2004, and profit margins of more than 30 per cent.
Hynix said its early graduation from creditor control was due to factors including its “determined restructuring, advanced technology [and] price competitiveness”.
After securing $1.3bn in syndicated loans and floating $500m in bonds, Hynix on Tuesday had met all the conditions for an early exit from the work-out scheme, KEB said in a statement.
Creditors injected Won3,200bn in bail-out funds and initially owned 81 per cent of Hynix, although this has since fallen to 74 per cent. The creditors would sell a third of their shares, worth Won2,280bn, during the rest of this year but are locked into holding the remaining 50 per cent until 2007 unless a strategic buyer emerges.