Hyundai chairman's shares to be sold to U.S. firm

Hyundai is pursuing a plan to sell in a bundle most of the Hyundai Motor shares possessed by Chung Ju-Yung, former honorary chairman of Hyundai, to a large American investment company.

On August 21, Hyundai stated that an American investment company recently expressed its intention to buy former honorary chairman Chung`s automobile shares, that negotiations are underway, and that this company does not have any special relationship with Hyundai.

The Hyundai side also stated that, as this American company clearly expressed that it has no intentions to participate in management rights regarding Hyundai Motor, Hyundai is presently in the midst of carrying out share price negotiations.

A related source at Hyundai said, "As the American investment firm has expressed its intention to buy over 10 million shares from the 12.71 million shares (6.1%) that former honorary chairman Chung will sell, if the negotiations go well, (the possibility of) a sale in bundle cannot be excluded," and emphasized, "There are no plans to sell shares to any relative`s corporation, as suggested by some, or to any companies with which Hyundai has special relationships."

Hyundai also stated that it hopes the Fair Trade Commission (FTC), along with Hyundai Motor, will participate in the automobile share sale and actual inspection processes in order to secure the transparency of the share sale process. If a decision is made on which company will buy the shares, Hyundai plans to complete its affiliate separation within this month after receiving the approval of the main creditor bank and the FTC.

Related to Hyundai`s announcement on this day, Korea Exchange Bank (KEB) and the Hyundai creditor group stated their intentions to grant the move conditional approval, saying that if Hyundai sells the 6.1% automobile share possessed by Chung Ju-Yung to a third party the sale must take place within this week and the candidate acquiring the shares must not have any special relationships with Hyundai.

A senior executive of KEB said that there is no reason to oppose Hyundai`s plan to sell former honorary chairman Chung`s Hyundai Motor shares to a third party as it decreases the burden on the creditor group, but added that he will not simply sit and watch any ruse by Hyundai to delay the sale or to sell to a person with which the group has special relations, like the market suspects.

As a result, the creditor group decided to have Hyundai sell former honorary chairman Chung`s Hyundai Motor shares under the condition that a definite affiliate separation takes place, and to acquire the shares by the creditor group according to the existing plan if a sale does not take place within this week or if a person with whom Hyundai has a special relationship is included in the buyers.

A related government official stated that the FTC and the Financial Supervisory Commission are standing by and carefully watching Hyundai`s sale of automobile shares, and if there are any problems with the sales method or procedure, the creditor group will be made to acquire the shares and process them.

Lee Byong-Ki eye@donga.com