Hynix creditors fail to agree on loan provider

Memory maker should be bailed out - but someone else should do it

Hynix's creditors may have agreed to loan the much-troubled memory maker fresh funds to keep it from collapsing, but they can't come to a consensus on which of them will cough up the cash.

"There is still some disagreement among creditors on the terms of the proposal,'' said Thomas Fallows, vice president of the Korean branch of Citibank, after a meeting of Hynix's creditors yesterday. "I'm not sure that there will be a definitive agreement,'' he added, referring to a second meeting planned for Friday.

Hynix's biggest creditor, the state-run Korea Development Bank, has already said it won't extend the company's credit line any further. Other creditors seem equally reticent, with the Korea Exchange Bank suggesting yesterday that Hynix's second largest creditor, Hanvit Bank, join it in picking up the tab, according to a Bloomberg report.

Last week Hanvit governor Lee Deok-hoon said it will extend the memory maker's credit line. He said keeping Hynix up and running is more in the bank's interest than allowing it to collapse. No wonder, then, that KEB reckons it should put its money where its mouth is.

However, Hanvit told its fellow creditors it wants others to share the burden too.

They seem unwilling to do so. "We are not comfortable with having to provide the new money,'' said Lee Deuk Young, deputy manager of the corporate restructuring office at Kookmin Bank, yesterday.

The proposed bailout plan centres on a 500 billion won loan. Issuing one trillion won of new shares and selling three trillion won of stock-convertible bonds to creditors is also part of the scheme Hynix has offered to ensure it has sufficient funds to continue to operate. It also wants to extend its repayment of 2.1 trillion won worth of loans it has already taken out. ®

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