In a for-shares deal, Micron is giving 108.6 million of its shares and an additional $200 million in cash for a 15 per cent stake in Hynix’s non-memory operations.
The deal was reached with creditors of the heavily indebted Hynix. The creditors, who are largely in the driver’s seat in the negotiations, will also provide $1.5 billion of long-term debt financing, for use by Micron in its Korean operations. Hynix has been teetering on the brink of bankruptcy for some time, and has only avoided defaulting on loans thanks to several rescue packages mounted by local banks last year, when its total debts hovered at around $7 billion.
Low RAM prices hurt company The company fell deep into debt after the price of RAM fell to a level where Hynix was selling chips at a loss. Now, with chip prices on the rise, debts have fallen and the company announced it had returned to profit.
The deal hasn’t been finalized yet. Hynix spokesman Daniel Behrendt said: “The major terms were agreed upon, but as with any deal of this size and nature, there is a variety of complexities that need to be still worked out.”
The two sides have set a deadline of April 30 for approval of the deal by the Hynix Creditors Council, the board of directors of both Hynix and Micron, and company shareholders.
“I would imagine approval from the Creditors Council would be forthcoming, because they are the ones that worked out this deal – but as for the board of directors or the shareholders, I don’t know the status,” Behrendt said. “There will probably be a lot of uncertainty until April 30, but after that day, I think a lot will become clear.”