SKorea's Hynix Semiconductor working to raise cash
By KELLY OLSEN,AP Business Writer AP - 2 hours 8 minutes ago
SEOUL, South Korea - South Korea's money-losing Hynix Semiconductor Inc. is making progress toward raising new capital from creditors and direct backing from the government is not being considered, officials said Monday.
Hynix, the world's second-largest manufacturer of computer memory chips after Samsung Electronics Co., has racked up four straight quarters of net losses amid a long slump in the semiconductor industry.
The Icheon, South Korea-based company is in discussions with creditors, which own 36 percent of its shares, and progress is being made toward a solution, said Hynix executive James Kim.
"We are discussing possible options very positively at this time," said Kim, who heads investor relations at Hynix. "But action won't be happening now."
Reaching a solution would take one or two months, he said.
The company, which is looking to raise up to 1 trillion won ($690.6 million), is in no immediate danger, but its cash position could come under pressure if industry conditions do not improve, Kim said.
Kim Eun-young, a spokeswoman for Korea Exchange Bank, Hynix's largest creditor, said nothing had been decided.
Hynix announced Sunday that it will carry out a massive cost-cutting effort to free up cash that can be used to help it recover from what it termed a "management crisis in line with the long downturn in the memory chip market and global economic slowdown."
The company said it will slash top officials' pay, cut the number of executives, encourage workers to quit voluntarily and make all employees take two weeks of unpaid leave between January and April next year.
Hynix competes with Samsung Electronics in NAND flash and DRAM, or dynamic random access memory, chips. NAND chips are used in digital devices such as music players and cameras, while DRAMs are used mostly in personal computers.
Semiconductor manufacturers have been hurt by a prolonged decline in prices for both kinds of chips due to oversupply.
Hynix recorded a net loss of 1.65 trillion won ($1.14 billion at current exchange rates) in the three months ended Sept. 30, its fourth straight quarter of red ink.
The head of the South Korean government ministry responsible for commerce and industry said a company in Hynix's position had no other choice.
"The measures announced by Hynix Semiconductor were pertinent and it is something that a company that is distressed must do," Minister of Knowledge Economy Lee Youn-ho told reporters.
"In case the main creditor banks decide that they cannot support or assist Hynix then the government may look into the problem," Lee said. "However at this point we have no plan to offer direct assistance to the company."
Hynix has run into problems before.
It twice nearly collapsed under mountains of debt only to be bailed out by creditor banks at the time majority-owned by the government, leading to disputes with the United States, the European Union and Japan at the World Trade Organization.
Such a history by itself makes any government involvement in assistance for Hynix unlikely, said Kim, the company official.
Shares in Hynix rose 3.2 percent Monday to close at 7,800 won ($5).
Recommend this article
Average (0 votes)
Sign in to recommend this article »
Most Recommended Stories »
Related Articles: Business
EU clears France's bank bailout planAP - 20 minutes ago
China wants to keep talking with US-US's McCormickReuters - 21 minutes ago
GLOBAL MARKETS-Equities surge on stimulus hopes for economyReuters - 24 minutes ago
Aquarius says suspends Everest platinum mine worksReuters - 24 minutes ago
Emerging Markets-Assets rally on stimulus plansReuters - 24 minutes ago
Most Popular – Business
Financial crisis tipped to cut cost of air travel
Girl, 8, among 17 dead in Manila shoot-out: police
Oil price falls below $40
Climate change: Sci-fi solutions no longer in the margins
Vinnie Jones gets into bar fight over role in X-Men
View Complete List »