Law change will allow speedy Hynix spin-off

Hyundai Group companies will entrust their Hynix stake to a Korean creditor bank

In this story: Group expected to sign a contract Shares to be sold by Korea Exchange Bank RELATED SITES

SEOUL, Korea -- South Korea's Fair Trade Commission said Monday it would revise laws to allow a speedy spin-off of chipmaker Hynix Semiconductor from the Hyundai Group.

"If Hynix stands alone without help from (Hyundai Group) affiliates, it will contribute to enhancing Korea's credibility and help stabilise the nation's economy," the commission said in a statement.

The spin-off is part of restructuring plans for Hynix, the former Hyundai Electronics.

The plans are eaimed at refinancing the heavily indebted company and breaking off from the Hyundai group to concentrate on semiconductors.

"Hyundai companies and acting group chairman Chung Mong-hun submitted letters to a creditor bank saying they would give up managerial rights and entrust their 19.14 percent stake in Hynix for future sale," commission official Park Ju-young said.

Group expected to sign a contract

They are expected to sign a detailed contract this month, asking Korea Exchange Bank to hold the stakes for nine months and then sell them when most favorable in the subsequent 12-18 months.

Current laws only allow spin-offs if the company reduces its stakes in sister firms to below three percent and the sister firms do the same.

Hyundai Merchant Marine has a 9.25 percent stake in Hynix while shipbuilder Hyundai Heavy Industries has 7.01 percent.

Hyundai Elevator holds 1.17 percent and Hyundai Group acting chairman Chung Mong-hun has 1.7 percent.

Shares to be sold by Korea Exchange Bank

The FTC statement said by approving the plan to sell the shares via Korea Exchange Bank, it would speed Hynix's spin-off and safeguard the Hyundai companies from exposure to Hynix.

Hynix is grappling with 5.67 trillion won ($4.40 billion) in debt maturing this year and is relying on a re-financing plan to survive.

One key to the plan, which includes local banks and investment trusts buying bonds and extending loan maturities, is a global depositary receipt issue worth up to $1.5 billion, the roadshow for which kicked off last week.

Hynix shares closed down 110 won at 4,310 won in the day's heaviest volume.

Reuters contributed to this report.

Hynix Semiconductor

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.