[Editorial] Hyundai must update managerial style

The Hyundai crisis, which has plunged the nation into economic unrest for the past few weeks, is showing signs of a solution with an agreement reached between the conglomerate and its creditors.

The solution agreed upon between Hyundai Group and its creditor banks contains, among other things, a sell-off of the stake in Hyundai Motor held by group founder and former chairman Chung Ju-Yung, and disposal of the shares in Hyundai Engineering and Construction (HEC) possessed by Hyundai Merchant Marine.

In this regard, raising our concern is the actual implementation of the agreed solution package.

In this process, Hyundai Motor will be naturally separated from the group, the dispute between siblings Chung Mong-Koo, its president, and Chung Mong-Hun, group chairman, is expected to be resolved. And if the solution proposal is implemented as it is, HEC will be able to reduce 1.5 trillion won of its debt, solving the current strains in the financial market considerably.

Regrettably, however, Hyundai failed to present a concrete plan to renovate its governance structure, which lags behind other business groups. The retirement of the Hyundai owner family from management is a commitment to the people, regardless of whether it is the best solution or not. As long as Hyundai Group owners remain the group¡¯s managers, it is doubtful how they could dispel the negative assessment by the market.

As for their adopted professional managers, who are liable for causing the present Hyundai woes, the group may have committed to disposing of them in accordance with legal procedures. We are concerned with the result of this commitment.

In particular, it is disappointing to learn that Hyundai did not come up with a blueprint for rectifying its old-fashioned management style. Unless Hyundai ends negative managerial practices, closed and arbitration, and being hell-bent on resolving liquidity problems only, its effect will be tantamount to pouring water into a bottomless pit.

We have no idea whether there is some behind-the-scenes deal between Hyundai and its creditors. Yet important are the creditors, which are well aware of the group situation, have reached an agreement. From now on, the creditors group, a party concerned, is to take a heavier responsibility, and the government capability will be critically tested in the course of the implementation of the solution plan.

Most import is the judgment of the market. Even if Hyundai secures such a great amount of fund and pays back its debt, Hyundai Group will find it difficult to sustain itself, the pertinent financial institutions help the group revolve its funds steadily. The creditors` support for the group is solely up to Hyundai`s viable presence in the financial market. For that matter, the group only should be tasked.

We expect that the Hyundai-creditors agreement will normalize the financial market and clear a stumbling block standing in the way for economic development. As for Hyundai Group, it must demonstrate to the people its sincere and earnest determination to carry out the managerial reform program, thinking that this is the last chance for the group to revive.