'Foreign players in Hynix auction limited to invst'

SEOUL, SOUTH KOREA: A major creditor-turned-shareholder of Hynix Semiconductor Inc said on Thursday that it will only consider potential foreign investors who do not seek a role in management of the world's No.2 computer memory chipmaker.

His remarks reflected official guidance to creditors to limit foreign influence of the key export industry in Asia's fourth-largest economy, a source said, and that may pose a hurdle to bidders - STX Corp and SK Telecom - to attract funds for a takeover.

Ryu Jae-han, chief executive of state-run Korea Finance Corp, told a press conference that shareholders may not back a bidding consortium with a large proportion of foreign funds.

The total size of the stake on auction would depend on the size of bidding shareholders' existing stakes -- some are as much as 15 percent worth about $2.3 billion -- and how many new shares might be offered.

"Creditors and (Hynix) board are still in discussions. But I am aware that the bidding guide mentioned an approximate 20 percent," Ryu added.

STX Corp and SK Telecom Co Ltd are in the running to take over Hynix. STX has said it will join with a Middle East-based sovereign wealth fund.

The South Korean government had told Hynix creditors to consider "management stability" and "prevention of technology leaks" by foreign shareholders when evaluating bidders, a source close to the matter told Reuters earlier.

The stake sale is the third attempt by creditors-turned-shareholders to find new investors for the chipmaker.

Creditors saved Hynix from a debt crisis in 2001, but previous auctions drew little interest from investors who were unwilling to jump into the cyclical chip industry.

Shares in Hynix jumped 4.1 percent, compared with the broader market's 0.6 percent gain.

Ryu said a recent stock market plunge would not affect the sale process, adding that the final bids would close in September after ongoing due-diligence.