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Chung Mong-Hun to sell off his shares to relieve financial crunch

Chung Mong-Hun to sell off his shares to relieve financial crunch

Posted November. 06, 2000 19:20,   


Chairman Chung Mong-Hun, Hyundai Asan's board of directors(BOD), will sell off disposable shares he holds in affiliates of the group to generate funds to relieve the liquidity crunch gripping the conglomerate, Hyundai Engineering and Construction (HEC) sources said Monday. There was no mention, however, of a request from the government and creditor banks to submit letters consenting to a capital reduction and debt-for-equity swap.

The creditors' group said it could hardly assure rescheduling of maturing loans unless the letter consenting to the swap scheme is turned in before the next meeting of the Hyundai creditors. The government officials concerned also stressed the need for the members of the owner family to come up with strong measures to help the HEC stand on its own within the framework of the law.

HEC executives entered into negotiations with overseas creditors who demanded redemption of BW bonds worth US$80 million on Monday and resolved to meet the bond settlement requirements due Monday with 43.4 billion won in its own funds. HEC disclosed that it decided to sell off stocks possessed by Chairman Chung in four of its listed subsidiaries-Hyundai Electronics Industries (1.7 percent or 67,700 million won), Hyundai Merchant Marine (4.9 percent or 13,400 million won), Hyundai Corporation (1.22 percent or 1,200 million won) and Hyundai Petrochemical (0.1 percent or 570 million won)-- excluding HEC (7.82 percent or 31,700 million won). Their combined cash worth reached 82,700 million won as of Nov. 6.

Chung plans to invest the proceeds from the stock sales in issuing stocks cum rights or purchasing company bonds or commercial papers.

A comprehensive self-rescue plan will be made public after consultation with the Korea Exchange Bank(KEB), HEC said. The plan is supposed to call for the selling-off of Hyundai affiliates and Seosan Farm, together with steps to bail out its ailing subsidiaries with its own resources. KEB vice president Lee Yeon-Su stated that creditor banks can hardly be persuaded to agree to a rollover unless Hyundai produces a drastic self-rescue plan including a letter of consent to the proposed debt-for-equity scheme.

Finance-Economy Minister Jin Nyum also asked the conglomerate to come up with measures to assist the tottering HEC without violating the Fair Trade Act and other related laws, predicting that the fate of HEC will be determined within one week. Elaborating on Jin's remarks, ranking officials of the Financial Supervisory Service(FSS) reported what the minister meant was investment of private funds by those leading stock owners in the Chung family such as Chung Ju-Yung, Chung Mong-Hun and Chung Mong-Joon. It is impossible for Hyundai affiliates to buy the company bonds or commercial papers issued by HEC, according to those officials.