Hynix Semiconductor Inc.’s board of directors has rebuffed the restructuring plan proposed by the Hynix Creditors’ Council, rendering void the previously announced MoU concerning the sale of the Korean chipmaker’s memory operations to Micron Technology Inc.
In a statement, the board said it believed the Council had overestimated the value of Micron’s stock, which was to be involved in the US $3 billion deal. The board also stated that it believed Hynix could “successfully exist as an independent entity.” The 10-member board voted unanimously against the proposal, following six hours of discussion.
Hynix president Park Chong-sup, who pushed the deal with Micron, resigned after the board’s decision.
Hynix officials ruled out the possibility of renegotiating the deal with Micron. Both sides have previously stated that there would be no more takeover talks in case the preliminary deal was not approved.
The deal between Hynix and Micron, of Boise, ID, had been in the works for months, and appeared to be close to final with the acceptance of Micron’s proposal by a 77.73% majority of Hynix’s creditors. Despite the acceptance by the creditors, Hynix’s workers and unions threatened to strike if Micron bought the ailing Korean chipmaker.
In a statement released by Hynix’s board of directors, officials wrote:
“The board of directors of Hynix Semiconductor Inc. has thoroughly reviewed the MOU signed with Micron on April 19, 2002; the validity and practicality of the April 29, 2002, resolution of Hynix’s creditors for the restructuring plan of Hynix’s remaining non-memory business; and the possibility of normalizing Hynix in the event that the merger talks with Micron break down.
“We have reached the conclusion that there are too many problems with the creditors’ post-merger restructuring plan for the remaining company.
“The plan overestimates the value of the Micron stock to be paid for the sale of Hynix’s memory business; unrealistically presumes the size and timing of contingent liabilities; and is too optimistic in its estimate of the cash flow of the remaining company.
“In addition, we have confirmed that, after its careful examination of the restructuring plan, Micron has also expressed concern to Hynix and its creditors regarding the viability of the remaining company.
“This concern is based on the restructuring plan placing too much liability onto the remaining company; restricting the sales of the stock of the remaining company as a collateral security; and overestimating the revenue and cash flow of the remaining company.
“We are confident that with the upturn in the semiconductor industry and new developments in our technology, our business competitiveness has improved and, therefore, we have concluded that it is possible for Hynix to successfully exist as an independent entity.
“Given the information available, the situation of the company and our study of the various solutions, we have made a unanimous decision that the sale of Hynix’s memory business may be a meaningful option in and of itself, but it is not the best option for the interested parties, including the company, its shareholders, its employees and its creditors, as the viability of the remaining company will be more uncertain under the restructuring plan than in the case of Hynix standing alone.
“Moving forward, we will continue to make every effort to normalize the future business management of Hynix.”