Creditor banks to provide funds to Hyundai

Creditor banks for the Hyundai Group agreed to roll over 504 billion won in loans maturing in September following the conglomerate`s announcement of a feasible rehabilitation plan on August 14. Hyundai group revealed that 6.1% of former Honorary Chairman Chung Ju-Yung`s 9.1% stake in Hyundai Motors is to be sold off and a group separation plan will be submitted to the Fair Trade Commission next week.

Hyundai Engineering & Construction (HEC) has set up a rehabilitation plan execution committee as a follow-up measure to the restructuring blueprint. The group`s main creditor bank, Korea Exchange Bank, and other banks met at the Korea Federation of Banks building, where they came to a decision to grant maturity extensions for loans, CPs and bonds maturing in September. HEC`s finance team revealed that the total amount of credit facilities maturing in September, including the non-bank sector, is 775.2 billion won. Of this amount, 504 billion won is owed to the banking sector.

Creditor banks also resolved to allow 7~8 banks with the largest exposure towards Hyundai (as of the end of June) to buy Hyundai Motors shares held by former Honorary Chairman Chung at 220 billion won (17,150 won as of the 11th) and to sell them to a third party. In case the share price rises, capital gains will be returned to Hyundai, but if the share price falls, HEC will have to cover the losses incurred by the creditor banks.

Meanwhile, as time is needed to prepare the necessary documents for the group separation process, an official application will be submitted by the end of next week. Considering the FTC has already accepted Hyundai¡¯s proposal, however, the separation of the group¡¯s affiliates is only a matter of time.