The long shadow of Hynix

The fortunes of Korea Exchange Bank, the Korean lender controlled by US private equity fund Lonestar, have been joined at the hip to those of its biggest debtor, Hynix Semiconductor, for years. Despite the successful restructuring of the company, it would appear that little has changed.

Just as the parlous financial condition of KEB because of its overexposure to Hynix created the circumstances that enabled Lonestar to acquire control of KEB in the first place, so the windfall profits that KEB stands to gain from the Hynix restructuring will affect the negotiations of the deal to sell Lonestar’s controlling interest in the bank [see table below].