Shareholders of South Korea's Hynix Semiconductor took another bruising as they failed at a third attempt to sell part of their $3.1 billion controlling stake in the world's No. 2 memory chipmaker.
The creditors-turned-shareholders received no bids by the close of Friday's deadline, which had already been extended by two weeks. They are likely to sell part of their combined 28 percent stake in the market.
Concerns about the price, the brutally cyclical nature of the memory chip business and an auction open only to local buyers, may have been the biggest deterrents.
Any buyer of the stake would gain control over a global player in memory chips, trailing only Samsung Electronics, and at a time when top firms are recovering strongly due to rising demand for personal computers and other gadgets.
But Hynix would come saddled with borrowings of 4 trillion won ($3.5 billion), according to top shareholder Korea Exchange Bank.
KEB said it and other creditor/shareholders were considering selling part of their combined 28 percent stake on the market, but would control at least 15 percent for a potential sale to a domestic buyer.
We will consider all options, including selling part of the stake, KEB said in a statement. We can also discuss receiving a letter of intent from any interested buyer in the future.
An earlier auction of the stake fell through in November when sole bidder Hyosung, a mid-sized firm focused on fibers and chemicals, walked away from the process.
Hynix shares have fallen 7 percent this year, broadly in line with the market after more than trebling in 2009.
Debt levels at many chip makers have risen due to heavy investment to catch up with technology development and to cope with losses during the downturn.
Hynix has a debt-to-equity ratio of 1.01 versus 1.77 for Japan's Elpida Memory, 0.41 for Micron Technology and 2.17 for Taiwan's Powerchip.
Samsung, also a leading maker of flat panels, TVs and mobile screens, boasts a healthier debt ratio of 0.11.
Conglomerates such as LG Group, which shareholders had hoped would show interest in Hynix, kept away from the auction. Shareholders and the South Korean government have excluded foreign bidders as they aim to protect high-end technologies.
Hynix shares shed 1.6 percent ahead of KEB's announcement in a broader market down 0.3 percent.
($1 = 1152.2 Won)
(Editing by Ken Wills and Anshuman Daga)