The Hyundai Group is planning to accelerate the spinoff of Hyundai Electronics Industries Co. Ltd. (HEI) as it struggles to pay down the unit's massive debt load by arranging new loans and looking for a buyer for a shuttered semiconductor fab in Wales.
The move, which would see HEI jettisoned earlier than the original 2002 date, is aimed at boosting investor confidence by distancing the electronics division from the Hyundai Group's ailing subsidiaries.
Under the plan, HEI will seek next year to raise $3 billion in new loans, securities, and asset sales in an effort to ease the pressure of $9 billion in outstanding debt. The division's financial problems are expected to flare up again in 2001, when a number of three-year bonds issued after Korea's 1997 economic crisis will mature.
HEI hopes to raise another $2 billion through the sale of a DRAM fab in Wales, which the company closed several years ago. According to a report in Taiwan's Economic Daily News, HEI has approached several of the island's electronics companies about buying the fab. To date, however, Taiwan's chip makers-including Mosel-Vitelic Inc., Taiwan Semiconductor Manufacturing Co. Ltd., and United Microelectronics Corp.-have balked at the asking price, according to the Daily News.
The HEI sales proposal comes at a bad time. Spot prices for standard 64-Mbit SDRAM have plunged nearly two-thirds this year, leading semiconductor makers to adopt a cautious stance toward expansion plans that could erode short-term profits.
Though TSMC and UMC have fabs outside Taiwan, and Mosel-Vitelic is planning its first overseas expansion, "it's not easy for them to manage overseas plants unless it's for the sake of serving customers there," said analyst Alfred Yin of BNP Paribas Peregrine Securities in Hong Kong.
Under the latest plan to cut its debt, HEI has arranged a $435 million loan from Citibank and four Korean banks, according to company executives. HEI also hopes to raise $435 million in additional domestic loans next year, and $1.15 billion in bond sales during the second half of 2001.