Posted November. 20, 2010 13:41,
Suspicion is rising over the source of the 1.2 trillion won (1 billion U.S. dollars) the Hyundai Group claims to have deposited in Natixis Bank of France for the acquisition of Hyundai Engineering & Construction.
Voices in the financial and business circles demanded a re-examination of the funds, but Korea Exchange Bank, the main creditor bank of the construction unit, said it will not reexamine the funds since a sufficient investigation was made.
The union of Hyundai Securities said Friday, Had the money come from Nexgen Capital, which is rumored to have signed a share agreement with the Hyundai Group to protect the managerial right of Hyundai Merchant Marine, the group must have been in a very disadvantageous position.
Given the speculative nature of Nexgen, it could have borrowed 1.2 trillion won to lend to the group, the union said.
A financial regulatory official said on the growing controversy, The most important factor in an M&A is the legitimacy of funds, adding, Creditors should make their own judgments at this point and either re-examine or take necessary steps when signing a memorandum of understanding with the group.
Though Korea Exchange rejected a re-examination of the funds since it said it identified the source of the funds, other creditors say an investigation is necessary because of the suspicion. One creditor said, Given the market`s concerns, we will pay attention to whether the deposit in Natixis Bank will be used in the takeover of Hyundai Engineering & Construction."
Separately, the group sent an official letter to a lead manager for the sale of the construction company Friday urging that the Hyundai-Kia Automotive Group be stripped of its right to be the secondary bidder.
The Hyundai Group said, Hyundai Motor violated its obligation to keep secret and refrain from taking issues with the decisions of creditors by spreading unfounded rumors to the media on the source of the funds for the takeover.
The funds used in the takeover are legitimate, and we will release detailed information on the funds after signing a sales contract on shares in the first quarter of next year.