Sale of Hyundai Electronics debated

The government is going to take away the managerial rights of Hyundai Electronics Industries (HEI) by forcing chairman Chung Mong-Hun and Hyundai Merchant Marine to sell their ownership in HEI under the projected self-relief plan of Hyundai Engineering & Construction (HEC).

However, Hyundai denied such a government scheme, saying that sales of HEI stocks are not included in the self-relief plan. Instead, Hyundai said that separation of HEI from the group will be done one year ahead of the original plan of 2003. So it is likely to spark a controversy over Hyundai's self-relief plan.

Also, HEC failed to pay maturing bonds with warrant that the company issues in the offshore market, thus temporarily falling into default situation.

Government officials said that Hyundai would abandon its right of management in HEI in order to keep HEC afloat, noting that it would be included in the company's self-relief plan.

"It is not only selling the company's stake in HEI but also abandoning its right of management, so Hyundai is expected to raise a substantial amount of money out of the sale," a government official said.

Officials at the Ministry of Finance and Economy said that there was no striking way to save HEC except selling HEI.

"Without such painful efforts, the group could face financial trouble as a whole," they said.

In this connection, Hyundai officials contend that HEI will be operated as an independent company within the group, adding that it will be separated eventually. They note that it means the company will adopt a professional management system and is far from selling it.

They explained that the self-relief plan proposed by the government and HEI's management are separate issues. As a result, Hyundai's announcement of its self-relief plan is likely to be delayed one or two days from the scheduled Nov. 15 because of the controversy over the future of HEI.