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 | | Monday, 27 August, 2001, 07:06 GMT 08:06 UK Hyundai shake-up in jeopardy  Corporate restructuring has provoked protests in Korea The restructuring of South Korea's Hyundai Group has run into yet more trouble as foreign creditors have given Hynix Semiconductor a week to repay a $46m loan or face bankruptcy. "Talks are under way with foreign creditors who have threatened to declare Hynix in default as early as this week," said Hynix spokeswoman Kang In-Young. The nine foreign banks made the move because Hynix, formerly Hyundai Electronics, separated from the parent group on 1 August, she said. The bankruptcy deadline follows the unravelling of a deal - agreed just last week - for American insurer AIG to restructure Hyundai Group's three financial businesses after wrangling about the price. Court complications The nine banks - led by Societe Generale of France - include HSBC, Chase Manhattan and Arab Bank. One solution to the debt crisis which has been mooted is for Hynix to issue 1.5 trillion won ($1.18bn) in new shares which would be offered to its creditors in a debt for equity swap. But domestic and foreign creditors may not be equally willing to accept the plan. An official from Hynix's major domestic creditor, Korea Exchange Bank, confirmed talks are taking place on a debt for equity swap.
"If creditors fail to reach agreement on debt rescheduling we can consider court receivership as a worst case scenario", the KEB official said. But foreign creditors fear they will not get their money back under a court receivership and so are moving to declare Hynix in default, analysts said. Shares slide Any new shares are unlikely to be worth much. On Monday, Hynix's shares slumped to 1,175 won, below their face value of 5,000 won ($3.9), and down from 1,330 won on Friday. Hynix's problems follow wrangling over whether American insurer AIG will go ahead with an agreement to buy three Hyundai financial businesses for $860m. The row about the price emerged just hours after the deal was signed on 24 August. Investors are still waiting to see it the deal will go ahead. Hynix has a 41% stake in Hyundai Securities, one of the businesses for sale, which is South Korea's second biggest brokerage and threatened with liquidation if the sale to AIG collapses. Hynix owes a total of 7.2 trillon won ($5.6bn), which includes 1.79 trillon won in bonds due for repayment by the end of this year, according to the Korea Securities Depository. | |
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