HITS to get 1.1 tril. won of foreign capital

Hyundai Investment Trust and Securities(HITS), which had been looking to relieve its impaired capital, is expected to gain 1.1 trillion won worth of foreign investment. An official with HITS said on Sunday that the company is expected to sign onto a main contract by Monday night, awarding it with a lump sum from the American International Group-led consortium, comprising five other institutions. The 1.1 trillion won is about 200 billion won more than the US$800 million agreed upon in the MOU exchanged in June between the two parties. If and when the lump sum foreign dollars come through, HITS, which had been facing a liquidity crisis since April, is expected to resume normal operations. According to the MOU, foreign capital will flow into HITS through three channels. The consortium will first participate in the issuance of 300 billion won worth of preferred stocks of HITS and Hyundai Securities, respectively. The consortium will also purchase some 300 billion won worth of the existing shares of HITS. However, with the final amount of foreign investment having increased, the company said that the consortium may participate in a different way.

The 1.1 trillion won worth of foreign dollars will mainly be used to redress the fragile profit structure of the company. The 300 billion won that will go into buying preferred shares of Hyundai Securities is also expected to be funneled back to HITS for issuance of its preferred stocks. Impaired capital of HITS stands at 1.2 triilion won. However, with the planned massive foreign investment, HITS is expected to hand over its management rights to the consortium, becoming the first investment institution in the nation to do so.