Gov¡¯t calls for sale of HEC¡¯s shares

The government has asked Hyundai Engineering and Construction (HEC) to sell its shares in Hyundai affiliates to its creditor banks and reduce its debts, which currently amount to 5.7 trillion won, to below 4 trillion. HEC possesses stocks in subsidiaries such as Hyundai Heavy Industries, Hyundai Motor and Hyundai Merchant Marine.

The government made the request through the creditor banks.

If Hyundai does not comply with the government¡¯s demand, the owner of Hyundai Construction will be stripped of his managerial rights and the company will be forced to undergo a comprehensive restructuring process quite different from the usual workout program, officials said.

Hyundai Group revealed that chairman Chung Mong-Hun will return home from an overseas trip on August 5 and will announce a self-rescue plan through consultations with the government and creditors on August 6.

Creditor banks will make the contents of the government¡¯s request more concrete through discussions with the Financial Supervisory Commission and will then deliver them to the Hyundai Group.

As of the end of last year, HEC¡¯s stocks in Hyundai affiliates broke down to 5.96 million (7.85 percent) worth of stocks in Hyundai Heavy Industries (HHI), 5.74 million (2.76 percent) in Hyundai Motor, 1.56 million (0.32 percent) in Hyundai Electronics Industries, 12.98 million (12.6 percent) in Hyundai Merchant Marine, 12.35 million (11.63 percent) in Hyundai Petrochemical and 7.84 million (6.09 percent ) in Hyundai Pipe.

The total price of the shares stands at 346.7 billion won.

Hyundai officials refused to publicize the details of their self-rescue plan, but said that they would fully respect the demands of the government and creditors.

They also said that it would be difficult to spin off HHI from the group within this year due to mutual equity investments and guarantees, but claimed separation will be concluded by 2001, two years earlier than originally planned.

As for the simultaneous withdrawal of founder Chung Ju-Yung and his two sons, the Hyundai officials said that former honorary chairman Chung and chairman Chung Mon-Hun had already stepped down, and the resignation of Hyundai Motor chairman Chung Mong-Koo was to be decided by Hyundai¡¯s motor unit.

Hyundai Motor officials said that chairman Chung Mong-Koo has no plans to resign, as the company declared in May that it would adopt a professional managerial system and Chung was a very professional businessman.