Hynix creditors aim to sell stake by September

The creditors of Hynix Semiconductor said they aimed to sell their 36 per cent controlling stake in the world’s second-largest maker of memory chips by the end of September.

But analysts said prospects for the stake sale were dim as the global economic downturn has driven down the valuation of chipmakers.

Since last June, the value of the stake has plunged by more than 75 per cent to about Won1,170bn ($864.6m). It is held by seven creditors, led by Korea Exchange Bank, that bailed Hynix out in 2001 when it was brought to the brink of collapse.

Hynix, like its peers, has been hit by weaker demand for chips and falling prices from oversupply. The South Korean group reported a Won1,650bn net loss in the third quarter.

The worsening economic conditions meant that Hynix has turned to creditors for Won800bn of financial aid including Won500bn of fresh loans and the extension of debt maturity. Hynix also announced a cut in capital expenditure. In November, creditors picked Credit Suisse, Woori Investment & Securities, and Korea Development Bank as lead managers for the sale.

Kim Jong-kap, Hynix’s chief executive, said on Monday he expected several domestic companies would be interested in the chipmaker as the industry is expected to recover in the second half.

Mr Kim said the industry hit the bottom in the fourth quarter of last year and predicted chip prices could recover in the second half, helped by production cutbacks. Prices fell 62 per cent last year because of a supply glut and cooling demand but have recovered 16 per cent this year. But analysts were sceptical about how many companies would be interested in the Hynix stake.

“The industry cycle will probably turn up in September, so the timing is not bad,” said Song Myung-sup at HI Investment & Securities. “Still, I can’t think of any possible buyer who is willing to invest at a difficult time like this, considering that the business requires huge capital expenditure.”

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.