Hynix shares tumble on new share sale concerns SEOUL (Global Markets) - Shares in South Korea's Hynix Semiconductor (000660.KS) tumbled more than 8 percent on Friday to five-month lows amid concerns of a substantive new share sale by the creditors-turned-shareholders of the chipmaker.Stock Market Predictions
Top shareholders of the company plan to launch the sale of their $2.9 billion stake on June 21 and a source with direct knowledge of the auction told Global Markets that they would seek to offer 20 percent of the firm including new share issues.
The shareholders had yet to decide how to break down the portion of existing shares and new share sales, said the source, who declined to be named as a final decision is yet to be made.
Hynix told the stock exchange on Friday it has no plans to issue new shares, but one of its top shareholders reiterated that they were keeping the option open to give potential buyers more choices.
"Our principle is selling a 15 percent stake (held by creditors-turned-shareholders) but we'll consider offering new Hynix shares as well," Ryu Jae-han, chief executive of Korea Finance Corp, a major Hynix shareholder, told reporters.
Selling new shares would give Hynix much-needed cash to upgrade its production facilities and better compete with sector leader Samsung Electronics Co (005930.KS) in a notoriously cyclical industry that requires massive capital investment, but some investors are concerned about diluted earnings.
"Some institutional investors are dumping Hynix shares, fearing new share issue will dilute its earnings per share," said Kim Sung-in, an analyst at Kiwoom Securities.
Ryu said creditors were seeking to launch the Hynix sale on June 21 to take preliminary bids in early July, with the deal likely to close between October and November.
Creditors will consider extending the schedule or relaunching the auction should the deal lure only one bidder.
The latest sales attempt is the third auction in as many years. Previous bids failed to attract strong interest as many fear exposure to the cyclical computer memory chip industry.
So far, Hyundai Heavy Industries (009540.KS), the world's top shipbuilder, is the sole potential bidder interested in the auction.
Hynix shares closed down 7 percent on Friday, after falling as much as 8.2 percent, versus the wider market's .KS11 1.2 percent fall.
(Reporting by Ju-min Park and Miyoung Kim; Editing by Jonathan Hopfner and Vinu Pilakkott)
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