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.