Governor Chung Gun-yong of the state-run Korea Development Bank said Wednesday that the bank will not provide fresh funds to Hynix Semiconductor Co., unless a reputable third party institution proposes an objective bailout plan.
KDB, which has provided loans amounting to W1 trillion to Hynix, is reportedly the largest creditor of the insolvent semiconductor maker. Consequently, it is highly likely that the bailout plan recently proposed by Korea Exchange Bank will go through a major face-lift. Moreover, the creditor banks' meeting scheduled for Aug. 31 may fail to produce a plan.
Chung further remarked that the bailout plan currently being discussed among creditor banks is not adequate enough to win credibility from investors and proposed that a reputable third party institution should assess the viability of Hynix and prepare an objective bailout plan for approval by creditor banks.
Chung also remarked that the bank will not allow Hynix to have a free ride without paying for losses expected from the company's restructuring. Chung remarked that the bank will not activate the immediate purchase of corporate bonds program for Hynix.
Chung asserted that the bank was not informed of the August 31 creditor banks meeting and repeated that the creditor banks should meet only after a reputable third party institution proposes an objective bailout plan.
