DATE=05/09/2002

TYPE=CORRESPONDENT REPORT

NUMBER=2-289611

TITLE=SOUTH KOREA/HYNIX (L-Only)

BYLINE=AMY BICKERS

DATELINE=TOKYO

CONTENT=

VOICED AT

INTRO: The board of South Korea's ailing Hynix Semiconductor has agreed to break up the company, after creditors said they would declare it bankrupt otherwise. As V-O-A's Amy Bickers reports from our Northeast Asia Bureau, business analysts are applauding the move.

TEXT: The world's third largest computer memory chip-maker is likely to hit the auction block in a few months. Under heavy pressure from creditors and the South Korean government, the Hynix board endorsed a plan to divide the deeply indebted company and sell it off.

Henry Morris, a business consultant in Seoul, says the step was inevitable, after the board recently rejected a three-billion-dollar takeover by Micron Technology of the United States. With five-billion dollars in debt, he says, it was impossible for Hynix to remain afloat without new loans.

/// MORRIS ACT ///

The company is insolvent and is not viable by any means. So what is going on is that the creditor banks are converting some of their debts and loans, which the company cannot repay to equity and that will make them the largest shareholders in the company.

/// END ACT ///

Despite the approval, South Korea's state financial watchdog says the creditors plan to fire the current board of directors and choose a new one to speed the pace of the break-up.

Creditors want to divide Hynix, and sell any units that attract buyers. Analysts say the sale is likely to take place piecemeal, over time.

/// OPT /// There is speculation that Micron might return to the negotiating table to purchase parts of the company, but a Micron spokesman did not confirm that. /// END OPT ///

Many Hynix employees would like to see the company spin off some of its operations and then reconfigure itself around its mainstay memory chip business. Analysts say that is unlikely, given the growing impatience of the company's creditors. (SIGNED)

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