Hynix rejects debt-equity swap reports

Hynix last week reported a large loss in its June quarter

By staff and wire reports

SEOUL, Korea -- South Korea’s Hynix Semiconductor rejected reports Thursday that it was considering a debt-for-equity swap with creditors to improve its finances.

Hynix said in a notice posted with the Korea Stock Exchange that speculation about a capital reduction was unfounded.

Local media reports and analysts have said big operating losses at Hynix, the world’s third-largest memory chipmaker, might prompt creditors to swap debt into equity, forcing a capital write-down.

“We are not considering a debt-to-equity swap with creditors. Such media reports are groundless,” a Hynix spokesman told Reuters.

Big loss for June quarter

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Last week, Hynix reported a pre-tax loss of 1.28 trillion won ($985 million) for the June quarter, compared with a loss of 469 billion won ($360 million) in the March quarter.

Its operating loss was 266 billion won ($205 million) on June-quarter sales of 1.16 trillion won ($892 million). It said interest charges, inventory write-downs and research and development expenses accounted for its heavy non-operating costs.

The poor result forced Hynix to temporarily halt its U.S. plant and to lay off 600 workers for six months.

It also prompted speculation about what else Hynix would do to avert a cash crunch.

Pushing for planned reforms

A local newspaper said on Thursday creditors were planning 500 billion won ($385 million) in support for the company, although on Wednesday Lee Youn-soo, vice president of main creditor Korea Exchange Bank, had denied fresh funding was being planned.

Instead, he said creditors would push Hynix to carry our planned reforms, which include selling non-core business lines.

The former Hyundai Electronics recently got $4 billion in financial support from creditors who pledged to help it address 5.67 trillion won ($4.36 bilion) in maturing debt this year.

The help included rolling over loans, fresh funds and buying Hynix bonds.

Reuters contributed to this report.