Creditors of Hynix Semiconductor on Monday extended their deadline for bids for a controlling stake in the world’s second-largest memory chipmaker, as the search for a buyer turns increasingly desperate.
Creditors, who own a combined 28 per cent stake in the South Korean company, have been trying for months to sell Hynix to a local strategic buyer but no bidder had stepped forward by the initial Friday deadline in spite of the company’s improving earnings.
Main creditor, Korea Exchange Bank, said the deadline had been extended by two weeks until February 12 to give potential investors more time to consider the deal. It added that it expected “active” participation by interested potential investors.
Creditors rescued Hynix after it almost collapsed in 2001 under the weight of its debts. Spurred on by the company’s strong turnround and a brighter outlook for the semiconductor sector, creditors have been anxious to sell to recoup their original investment worth $4.6bn.
However, the company has proved to be a hard sell due to its heavy investment requirements and the industry’s highly cyclical nature. Foreign strategic buyers are excluded from the auction because of concerns over technology leaks. Creditors’ first attempt to sell the company fell through last year as Hyosung, the sole bidder, withdrew its offer for the 28 per cent stake, worth $3.15bn at the current market value.
Since then, creditors have failed to draw any interest in Hynix from potential investors although the company reported its biggest quarterly profit in three years in the fourth quarter. Helped by rising chip prices, Hynix swung to a net profit of Won652bn in the October-December period, from a Won1,690bn loss a year ago.
Analysts say it will be difficult to draw interest at a time when other South Korean assets are hitting the market. State-run Korea Development Bank plans to restart the sale of Daewoo Shipbuilding & Marine Engineering as soon as the government speeds up efforts to privatise state assets. Other companies on the sales block include Daewoo International and Daewoo Engineering & Construction.
Creditors recently scaled back their sale plan, lowering the minimum stake it plans to sell to 15 per cent of Hynix to reduce financial burden for potential investors. Last week the creditors said they would study all possible options including offloading their shareholdings in parts in the market.
Hynix shares plunged more than 3 per cent on Monday morning as investors feared that creditors might be forced to divest part of their stake in a block sale on the stock market. The shares rebounded later to close up 1.53 per cent at Won23,100 after losing 13 per cent last week alone.