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Hyundai Group refuses creditor’s demand on acquisition

Posted November. 29, 2010 22:05,   


Hyundai Group refused Sunday a demand from Hyundai Construction & Engineering’s creditors to submit material on how it will fund the acquisition of the builder.

The refusal came a day before the scheduled signing of a memorandum of understanding with creditors, casting a cloud on whether the group can regain its former construction arm.

Creditors requested Thursday documents on the source of 1.2 trillion won (1 billion U.S. dollars) that came from deposits in the French bank Natixis held by the French subsidiary of Hyundai Merchant Marine, the group’s flagship shipping company. But the group rejected the request.

“We complied with the bidding rules and fully explained the financing sources,” a Hyundai source said. “We can submit additional documents if needed after the memorandum of understanding is signed. But before that, we won’t accommodate the creditors’ demand, which is not required by the law.”

The creditors including Korea Exchange Bank, Korea Finance Corp. and Woori Bank will hold a meeting Monday for legal review of the group’s refusal. They will also discuss whether to sign a memorandum of understanding or cancel the naming of Hyundai as the preferred bidder.

Hyundai Group said Sunday that it will sue the Hyundai-Kia Automotive Group for 50 billion won (43.4 million dollars) in damages for making what the Hyundai Group called groundless accusations. A group source said, “It is a clear infringement of contract because the Hyundai-Kia Automotive Group violated the ban on raising objection in bidding and raised groundless suspicions.”

“We will file a lawsuit against the automotive group-led consortium and the two executives involved.”

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