Hyundai family ends dispute to save Hyundai Engineering
Hyundai family ends dispute to save Hyundai Engineering
SEOUL (AFP): The sons of the Hyundai Group founder on Thursday
gave in to government pressure to end months of wrangling and
raise money to save the group's bankruptcy threatened engineering
unit.
Following a peace meeting between rival sons of patriarch
Chung Ju-Yung, Hyundai Engineering and Construction Co. said it
was set to unveil plans to raise US$882 million of fresh
liquidity to avoid bankruptcy.
The rescue plan had been held up as Hyundai Motor Co. and
Hyundai Heavy Industries Co. had refused to come to the rescue of
Hyundai Engineering.
But on Thursday, the two companies yielded to pressure from
the government and creditor banks to make a U-turn.
Chung Mong-Koo, the chairman of Hyundai Motor, on Thursday met
his brother, Chung Mong-Hun, who controls Hyundai Engineering.
Chung Mong-Koo promised to cooperate in easing cashflow problems
at his rival brother's ailing enterprise, company officials said.
The two brothers, whose fighting over control of the Hyundai
Group triggered a management crisis early this year, agreed to
bury the hatchet, a Hyundai Motor spokesman said.
"Hyundai Motor will study legitimate measures (to help Hyundai
Engineering), which would be beneficial to both companies," Chung
Mong-Koo was quoted as telling Chung Mong-Hun.
Hyundai Motor and the shipbuilding giant have both virtually
broken off from the main group. But the government had pressed
both companies to help the stricken engineering firm.
"Hyundai Engineering and Korea Exchange Bank plan to jointly
announce Hyundai Engineering's self-rescue plan to raise one
trillion won ($882 million) Friday," a spokesman, Park Jong-Kil,
told journalists.
Korea Exchange Bank is the main creditor of Hyundai
Engineering, which twice narrowly avoided being declared bankrupt
last week because of defaults. Its debt stood at 5.2 trillion won
($4.6 billion) at the end of October.
Under the plan, Hyundai Engineering will raise some 600
billion won by selling a huge ranch built for the group's founder
to farmers and agricultural corporations.
It will also receive 400 billion won from Hyundai Motor and
Hyundai Engineering by selling its stakes in other Hyundai units
and real estate. Chung Mong-Hun will sell private assets worth
between 40 and 50 billion won and put the proceeds into Hyundai
Engineering.
The Hyundai Group proposed Hyundai Motor buy the 2.69 percent
Hyundai Motor stake held by Chung Ju-Yung, and take over the
group's trading arm, Hyundai Corp., and a car audio maker,
Hyundai Autonet.
It also offered to sell Hyundai Engineering's headquarters in
Seoul to Hyundai Heavy Industries, which has the world's largest
shipyards.