US`s AIG Rejects to Take over Hyundai

Just a day after the Financial Supervisory Commission (FSC)`s announcement of the settlement, the US`s AIG consortium, who decided to purchase three Hyundai financial companies including the Hyundai Investment Trust & Securities (HITS) and the Hyundai Securities, refused the terms to take over, which created a stir in the country.

The AIG consortium officially announced yesterday that ``we cannot accept the Hyundai Securities` decision to issue the preferred stocks in the price of 8,940 won per stock. Unless the terms like this will be adjusted, it will be hard to settle the negotiation.``

And the People’s Solidarity for Participatory Democracy (PSPD) declared to apply for a provisional injunction because the negotiation to sell the HITS encroached upon the rights and profits of the small shareholders of the Hyundai Securities that is a top-ranking company.

The AIG agreed on the Memorandum of Understanding (MOU), according to which the AIG will invest 1 trillion 100 billion won to three Hyundai financial companies such as HITS, Hyundai Securities, and Hyundai Investment Trust Management on 23rd. In particular, the AIG made an agreement to acquire the 29.4 percent of the shares by investing 400 billion won to the Hyundai Securities and purchasing the preferred stocks for 8,940 won through the third party assignment method.

The government and the Hyundai expressed the uncomfortable response to the incomprehensible attitude of the AIG.

Jin Nyum, the Deputy Prime Minister and the Minister of Finance and Economy, told in a TV program that ``we agreed on the MOU, according to which the AIG will invest 1 trillion 100 billion won to the HITS and the Korean government will invest 900 billion won to it. And the public funds of 500 billion won will be invested for this.``

The vice chairman of the FSC Yoo Ji-Chang said that ``there was no content regarding the price of new stocks of the Hyundai Securities on the MOU. The price issue was merely designated as a first consideration which should be settled before making the main contract.``

And Yoo told that ``this is not the issue of which the government should take care because it should be settled between the Hyundai Securities and the AIG. But it is incomprehensible that the AIG, who knew well that the domestic law designated the greatest discount rate as10 percent of the standard price for the third party assignment method, refused to take over the stocks of the Hyundai Securities.``

However, irrespective of the AIG`s sudden change of its decision, the government will be unlikely to evade the blame that it handled the matter with more haste than caution.

The market experts pointed out that ``regardless of the AIG`s intention, it was hasty for the government to announce the settlement of the negotiation in the situation in which the most important price issue was not decided.``

The PSPD revealed to apply for a provisional injunction of new stock issue as soon as possible, maintaining that the sales of the HITS encroached upon the rights and profits of the small shareholders of the Hyundai Securities.

Park Joong-Hyun sanjuck@donga.com