Hyundai Gives Up Hyundai Petrochemical:

Affiliate companies in Hyundai Group have decided to abandon Hyundai Petrochemical (HP). It seems that they have concluded to give up their invested money rather than reinvest more money for the faltering company. Consequently, Hyundai Petrochemical is expected to separate itself from the Hyundai Heavy Industry Group (HHIG).

Hanvit Bank revealed yesterday that major share holders of the HP including the HHIG have agreed on a complete capital write-off, while Hyundai Development Co. (HDC) and Hyundai Department Store Co. (HDSC) have not decided yet.

It is expected that although HDC is opposing to the write-off due to the expected loss of 60 billion won, the company will soon submitted a letter of agreement depending on the situation.

Major share holders of the HP are comprised of the HHIG 49.87 percent (Chung Mong-Jun division), Hyundai Motor Co. 14.99 percent (Chung Mong-Ku division), Hyundai Construction Co. 11.63 percent (Chung Mong-Heon division), and the HDC 9.53 percent (Chung Mong-Kyu division).

Thus far, creditors have been asking the major share-holders to select one option between the complete write-off and abandoning of the company or an additional fund of 400 billion won. An unnamed creditor said, ``it seems that the former subsidiary companies of Hyundai Group don’t have intention to recuperate the HP. They are hoping to cut off themselves from the HP simply loosing their shares without additional investment.``

Since the cash shortage of the HP has been 1,000 billion won this year, creditors plans to extend the deadline, end June, of cooperative loan of 100 billion won, and prepare a scheme to revive the company which can be a massive debt-equity swap and provision of new fund. They are considering the deadline of the CB owned affiliate companies including the HHIG to be extended after reducing of the interest rate. Creditors are also taking into consideration of the 50 billion won of subsidy from affiliate companies to be included in the list of the debt-equity swap objects.

Kim Do-Young nirvana1@donga.com