Gov¡¯t attitude on Hyundai shifts

Is the government policy on Hyundai Engineering and Construction (HEC) shifting toward putting life into the ailing company?

The government had been stressing that it would place Hyundai under court receivership, but its attitude has changed since Monday. So industry sources speculate whether the government has decided to revive Hyundai.

At a press conference, Minister of Finance and Economy Jin Nyum said that HEC should stay afloat considering the nation's economic burden as well as ongoing overseas construction projects being carried out by the company. His remarks are different from the government's previous attitude that the company would let it go bankrupt and put it under the court receivership.

Lee Keun-Young, head of the Financial Supervisory Commission, said that Hyundai's self-relief package is good enough to tackle its liquidity problem, noting that creditor banks would offer fresh loans to Hyundai.

"If Hyundai's self-relief plan is certain, it does not have to submit an agreement for capital reduction or conversion of bank loans into equity investment," he said.

The problem is that Hyundai's survival remains in its own hands despite the change in the government's attitude. The most important point is whether the government is willing to help Hyundai solve its financial shortage.

In this connection, both the government and creditors maintain their steadfast position and there is no change in their attitude. The government is helping Hyundai sell its Sosan Farm through the state-run land development firm. However, it is certain that Hyundai might not be able to solve its financial trouble if it fails to submit a self-relief plan that satisfies investors Nov. 15.

The sale of Hyundai Securities to AIG depends upon Hyundai. The government is willing to help the company under the legal framework that it could sell the company to foreign buyers.

Hyundai has submitted its own self-relief package four times -- in June, July, August and October. Yet it has failed to restore investor confidence, thus causing a liquidity problem. Only Hyundai knows whether such a situation will last.

Hong Chan-Sun hcs@donga.com