Hyundai Group struggles to draw up self-rescue plan for Hyundai Construction

Hyundai Group is promoting plans to spin off Hyundai Electronics Industries (HEI) ahead of schedule and transfer Hyundai Corp. to Hyundai Heavy Industries (HHI) or Hyundai Motor Co. (HMC) while selling Hyundai Autonet to HMC. The group is also seeking to sell off its main office building (worth about 170 billion won) in Key-dong, central Seoul, to HHI and Hyundai Mobis. However, the group is having difficulty in finally fixing and announcing these plans as HMC and HHI both denied the report, saying that they have never consulted with Hyundai group on such deals and have no intention to do so. This being the case, the government pressed the group for a quick settlement to the HEC crisis by emphasizing that HMC and HHI should do whatever they can to help HEC stay afloat as far as the law permits.

Kim Jae-Soo, head of the group¡¯s corporate restructuring committee, said Wednesday that Hyundai Asan Chairman Chung Mong-Hun will soon meet with Chung Mong-Koo, president of HMC, and Chung Mong-Joon, advisor to HHI, for consultations on these plans.

Kim said that the group also decided to spin off HEI by 2002 and lower the stake (16.3 percent) in the company held by Chairman Chung and Hyundai affiliates such as Hyundai Merchant Marine and HHI to below 3 percent. A plan to transfer the stake held by Hyundai affiliates to an international consortium led by a foreign institution is also under consideration, he said. In addition, HEC decided to hand over its ongoing overseas construction projects and SOC businesses to other companies and sell off its assets (worth about 45 billion won) in Pundang in the southern outskirts of Seoul. If realized, all these plans will create total liquidity of 900 billion won for cash-strapped HEC.

Meanwhile, HMC refused to accept the deals. Officials said that they do not intend to purchase Hyundai Corp. because its operations are not in line with its auto making business, and see no reason to take over Hyundai Autonet as it is adopting an outsourcing strategy for the supply of electronic parts. HMC also rejected an offer to buy the Key-dong office building, noting that it has just moved into a new office building in Yangjae-dong. HHI also said that it has no plans to purchase the office building. As a result, chances are high that the announcement of Hyundai¡¯s self-rescue plan will be delayed.