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Hyundai Chairman sells off his shares

Posted August. 22, 2000 20:56,   


Hyundai disposed of 12,710,000 shares of Hyundai Motor, which corresponds to 6.1% of all Hyundai Motor shares held by former honorary chairman, Chung Ju-Yung, on the stock market the morning of August 22.

With the sell-off of Hyundai Motor shares held by former honorary chairman Chung Ju-Yung, an obstacle that prolonged Hyundai¡¯s attempt to split up its motor division (Hyundai Motor and Kia Motors), for 50 days since their promised deadline of June 30, has been removed and essentially completed.

Hyundai has been promising an overseas sell-off of the shares since the end of last week and announced in the evening of August 21 that the shares will be sold to an American investment company known as Jardin Flemming. However, Hyundai suddenly changed their minds and disposed of the shares on the stock market. Some from a section of the stock market criticized Hyundai¡¯s change of mind as deceitful and questioned whether their mass disposal of shares without notice took place in consideration of a special interest party. They complained especially for not getting a chance from the Hyundai Motor side to buy any of the shares and remarked that an investigation is needed on its integrity

At this remark, Hyundai revealed that negotiations in fact took place with Jardin Flemming for disposal of over 10 million shares. However, Jardin Flemming, in the early morning of August 22, notified Hyundai that they could only purchase 2.5 million shares, compelling Hyundai to dispose of the shares on the stock market. Hyundai strongly dismissed the theory that it was giving a favor to a special-interest party with the sell-off.

Former honorary chairman Chung Ju-Yung¡¯s Hyundai Motor shares were traded from around 9:13 a.m., a few minutes before the opening of the stock market this day and sold out to institutional investors such as the National Pension Corp. and general investors at a price range of between 15,600 and 15,800 won.

Kang Dae-Hyung, director of the Antitrust Bureau at the Fair Trade Commission stated that the validity of Hyundai¡¯s assertion that the shares were disposed to institutional and general investors as opposed to a special interest party is the biggest issue at hand and if Hyundai¡¯s assertion is in fact true, Hyundai has no reasons to object to the split-up of its motor division. The FTC has been requesting Hyundai to lower former honorary chairman Chung Ju-Yung¡¯s Hyundai Motor shares to below 3% as his holding of shares above 3% violates the fair trade law on the conditions for splitting up its motor division.

Hyundai plans to use the proceeds from the sell-off, which will be deposited on August 24, to purchase three-year corporate bonds to be issued by Hyundai Engineering & Construction to alleviate their liquidity problems.

Lee Byong-Ki eye@donga.com