SK Hynix Tries to Get 15% of Voting Rights for Toshiba Memory

Joy Montgomery
September 28, 2017

The remaining 266 billion yen (US$2.35 billion) will be invested in a fund to be established by Bain Capital with SK Hynix as an LP (limited partner). The consortium including SK Hynix and Bain Capital, Toshiba and Hoya have 49.9%, 40.2% and 9.9% equities in voting rights, respectively.

The board at South Korea's No. 2 semiconductor company approved the decision, which will help the South Korean chipmaker advance in a segment known as NAND flash memory chips.

While talks relating to consortium member Apple Inc's AAPL.O demands on chip supply have now been settled, the group still has to work out one snag that relates to financing in the event that legal risks materialize, one source with direct knowledge of the deal said. These companies will invest in the form of non-convertible preferred shares, according to Reuters.

The Bloomberg article said: "If KKR is able to persuade Apple to switch sides at the last minute, it could upset a deal that had looked like it would end months of twists and turns in finding a buyer for Toshiba's prized asset". The trip is interpreted as a move to coordinate the acquisition of Toshiba Memory at the eleventh hour. It said the deal will go through regardless of the legal wrangling with Western Digital.

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The company had also previously sought an injunction from a California state court to block any sale of the chip unit without its consent.

However, since it usually takes more than a year for the International Arbitration Court to arrive at a conclusion for arbitration, WD made a decision to seek an injunction which can put a quick brake on the sell-off of Toshiba Memory. WD expects the results of its application for an injunction to come out within this year at the earliest.

Should the injunction be granted, Toshiba would be unable to unload its memory unit during the arbitration process. If it fails to eliminate its negative net worth, the Japanese company will be delisted from the Tokyo Stock Exchange. Although is now strategically in the position to score the dale with Toshiba, it remains a mystery if the conglomerate will award the chip unit to the Bain-led group since there are other bidders at play.

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