Self-rescue plan gets mixed up; creditor bank denies its reception

Hyundai Group has decided to sell Hyundai Merchant Marine's stake in Hyundai Heavy Industries and Hyundai Electronics Industries to raise about 550 billion won and aid Hyundai Engineering & Construction (HEC) with part of the fund.

Also, Hyundai Asan chairman Chung Mong-Hun will sell a substantial portion of his stock holdings in Hyundai affiliates to participate in HEC's capital increase.

Chairman Chung announced the self-relief plan to a high-ranking government official. Hyundai Merchant Marine's ownership in Hyundai Heavy Industries and Hyundai Electronics Industries is estimated at 182.7 billion won and 368.7 billion won at Monday's closing price.

However, it seems the self-relief plan is entangled internally, as chairman Chung announced the sale of his stocks, but he denied it later in the day, saying that he never considered it and that there is no intention to sell the stocks.

Hyundai plans to pour the fund of 550 billion won to be raised from stock sale into HEC and Hyundai Merchant Marine. The group also said that it hadn't been decided who'll buy to stocks of Hyundai Heavy Industries and Hyundai Electronics Industries.

In this connection, Hyundai announced that it would separate Hyundai Heavy Industries from the group as soon as the payment guarantee is settled and run it as a independent company. Chairman Chung also intends to sell off a large portion of stock holdings in Hyundai Electronics Industries, Hyundai Merchant Marine, Hyundai Corp. and Hyundai Petrochemical to participate in HEC's projected capital increase.

Still, Hyundai refused to confirm whether it had submitted consent for capital investment as well as HEC's capital reduction as requested by the government and creditors.

Overseas investors Monday asked HEC for redemption of US$80 million in bonds with warrant (BW) at maturity, so Hyundai is negotiating with them for a possible rollover. On the same day, the company paid 43.4 billion won of matured promissory notes.

Meanwhile, Korea Exchange Bank, Hyundai Group's main creditor bank, showed a prudent attitude, saying that it has to be confirmed whether the additional self-relief plant of HEC is a final one approved by the group.

"There was no official notice from Hyundai," Lee Yon-Soo, vice president of the bank, said. "First we have to check whether the plan is confirmed through the group's internal screening."