NEW YORK-Moody’s Investors Service Inc. is reviewing $400 million in Hyundai Semiconductor
America debt for possible downgrade because merger talks between HSA and LG Semicon Co. Ltd. hit an impasse and
failed to conclude before the Dec. 25 deadline imposed by the South Korean government.
The affected senior
secured notes now carry a speculative-grade rating of Ba2 from the New York-based rating agency.
Hyundai
Semiconductor America is a special purpose corporate vehicle that operates a $1.4 billion semiconductor fabrication
line in Eugene, Ore., where HSA is headquartered. Seoul-based Hyundai Electronics Industries Co. Ltd., one of Korea’s
largest semiconductor manufacturers, owns 84 percent of HSA and is the primary financial sponsor for its Oregon chip
plant.
“LG Semicon is contesting the recommendation by moderator Arthur D. Little (Inc.) to assign
management control of the merged entity to [Hyundai Electronics],” said Robert Konefal, managing director, and
Wolfgang Draack, senior vice president, of Moody’s corporate finance department.
“The ongoing controversy
between the partners-to-be likely will delay the effective integration of operations. [Furthermore], financial penalties
encouraged by the Korean government, which is committed to speeding up the process of industry consolidation, may
eventually hurt both companies.”
