Hynix further complicates Micron merger deal

Just when it seemed that the Hynix-Micron merger talks were finally heading

for the finish line, Hynix officials created new complications by demanding that

Micron guarantees the survival of Hynix's non-memory business.

Micron, of course is mostly interested in the memory chip operation as this

would make it the world's largest memory IC maker. Hynix also has business

operations in the areas of including foundry and system ICs that are used for

many electrical gadgets. These products account for about 30 per cent of Hynix's

sales.

Hynix said it wants Micron to guarantee a certain level of investments to

ensure these business units will survive. "Any memorandum of understanding

with Micron should guarantee the survival of Hynix's remaining unit, with Micron

engaging in a direct investment in non-memory," Hynix officials announced.

The latest Hynix demands come days after Micron gave Hynix a new list of

requirements with regards to Hynix’s creditors, which are owed some $7

billion.

And in an apparent effort to scare Micron into finalizing a deal on terms

most favorable to Hynix and its banks, Hynix also said it is now also working on

a new plan for independent survival, provided that is banks provide a new line

of credit. "The board of Hynix seriously reviewed the possibility of

independent survival on the condition of creditor support," a company

statement said.

To get an idea of where the negotiations stand, here is a review of the key

demand made by Micron and Hynix:

What Micron wants:

· Hynix's banks provide $1.5 billion in new loans for new plants and

equipment.



· Micron want the option to take back 50 percent of the Micron shares it is
using to make the purchase in the event Hynix has far greater financial losses

than previously disclosed.



· Hynix's creditors will not be allowed to sell the Micron shares they will
receive for a certain period of time.



· If Micron shares fall below $35, Micron wants Hynix's creditors to provide it
with additional compensation.






What Hynix wants:

· Micron has to guarantee the survival of its non-memory operations.



· Micron has to agree completely on every term specified in any memorandum of
understanding.



· Hynix wants a definitive agreement to be signed in one or two months after
the initial Memorandum of Understanding.