How practical is Hyundai Engineering & Construction¡¯s new restructuring plan submitted on August 13?
Corporate loan officers of commercial banks are saying that in order to raise 1,500 billion won by the end of this year, Hyundai may need to dispose of assets regardless of the price.
The easiest way to raise liquidity as an attempt for self-revival is to sell shares of Hyundai Motors and two other listed Hyundai companies. If creditors undertake the 6.1% share of Hyundai Motors that Honorary Chairman Chung Ju-Yung has entrusted for the purchase of long-term HEC bonds within this month, Hyundai could raise 220 billion won. Moreover, if HEC¡¯s 5,550,000 shares of Hyundai Electric Industries and 2,350,000 shares of Korea Development in custody of its main creditor, Korea Exchange Bank, are sold, Hyundai could secure an additional 300 billion won from the sale of marketable securities within August. HEC could also issue exchangeable bonds backed with shares of Hyundai Marine and Hyundai Heavy Industries to raise 220 billion won with ease. A corporate loan officer from one bank asserts that although a dispute is expected over the exchange price and the interest rate, the bonds could be issued within a month. The problems are with selling unlisted companies to a third party and real estate. Hyundai is asking for what they are worth while the potential buyers are asking for a bargain.
The chief of Hyundai¡¯s restructuring headquarters, Kim Jae-Soo, did not speak in detail at the announcement of Hyundai¡¯s restructuring plan August 13 about the disposal of Hyundai Petrochemical and Hyundai Oil, the two unlisted companies. He only mentioned that the disposal of shares and convertible bonds would be discussed and treated with Korea Exchange Bank. Related stock market personnel pointed out the importance of calculating appropriate prices, citing Hyundai¡¯s self-revival attempt to dispose of Hyundai investment and securities.
In June, Chung Mong-Hun of the Asia-Pacific foundation committee proposed 100,000 per share as the appropriate price. However, in August when it was listed on KOSDAQ, the per-share price flopped to the 20,000 level. Officers from the KOSDAQ market felt that through the stock price is undervalued due to the weakened market and the Hyundai crisis, it shows a difference of five times in just one month, indicating that the matter will not be easy to solve.
The chief of Hyundai¡¯s restructuring headquarters, Kim, also stated that the disposal of Hyundai Petrochemical and Hyundai Oil would be tough to resolve within this year. He asserted that Hyundai will carry the matter over to the first quarter of next year if necessary, indicating the struggle that lies ahead. The construction industry is uncertain whether Hyundai will be able to resolve its prolonged difficulty with collecting on uncollected accounts and prepaid expenses worth 200 billion won within four to five months.