Chung Mong-Koo, Chung Mong-Hun agree to revive HEC

In quite a dramatic fashion, Chung Mong-Koo, chairman of Hyundai Motor, and Chung Mong-Hun, chairman of Hyundai Asan Corporation, agreed on Thursday to cooperate in the efforts to help Hyundai Engineering and Construction (HEC) get back on its feet. HEC plans to finally formulate a specific self-rescue plan worth about 1 trillion won and submit it to creditors before announcing it publicly on Friday.

Korea Exchange Bank, a main creditor of HEC, also decided to offer fresh loans to help HEC take overseas construction orders if its self-rescue plan is effective enough. With the agreement between Chung Mong-Koo and Chung Mong-Hun, the building arm of Hyundai Group has secured a foothold for revival. Earlier on Wednesday, Lee Keun-Young, chairman of the Financial Supervisory Committee, met with Chung Mong-Koo, chairman of Hyundai Motor, and urged him to offer assistance to HEC to the fullest extent the law permits. Lee is regarded to have played a key role in persuading the two brothers to reconcile.

Officials of Hyundai Motor said, ¡°Chairman Chung Mong-Koo met with Chairman Chung-Hun at his office building in Yangjae-dong, southern Seoul, on Thursday and agreed to offer aid for HEC.¡± Specifically, they agreed to have Hyundai Mobis (formerly Hyundai Precision) purchase a 2.69 percent (worth 94 billion won) stake in Hyundai Motor held by group founder Chung Ju-Yung and have Kia Motors take over Hyundai Autonet (80 billion won). They decided to sell off HEC¡¯s iron factory in Inchon to Inchon Iron & Steel. Hyundai Motor also said that the two Chungs agreed to collect wealth from their family members to purchase 1.5 million pyong of the Sosan farmland (30 billion won) up for sale and establish a memorial hall for Chung Ju-Yung on it.

Hyundai Heavy Industries is also positively considering a plan to purchase the Hyundai Group headquarters (estimated to be worth 170 billion won) in Kye-dong, central Seoul, possessed by HEC.

Combined, the assistance from Hyundai affiliates controlled by Chung¡¯s family, including Chung Mong-Koo and Chung Mong-Joon, is expected to reach 416 billion won. Chung Mong-Koo¡¯s affiliates will give 94 billion won and Chung Mong-Joon¡¯s affiliates will offer 170 billion won. Another 30 billion for Chung Ju-Yung¡¯s memorial hall will also be paid by other HEC sister companies.

Meanwhile, a high-ranking official of Korea Exchange Bank said that if HEC puts forth a convincing self-rescue plan, the bank would consider offering fresh loans to help the company take overseas orders. This is an abrupt about-face from its former position that there would be no fresh loans until HEC recovers from its liquidity crisis completely.

Lee Byung-Ki eye@donga.com