Hyundai given ample debt relief

Hyundai given ample debt relief

SEOUL (Reuters): South Korea's Hyundai Motor has been given substantially more debt relief than it originally asked for in its deal to take over troubled Kia Motors Corp and Asia Motors, it was announced on Thursday.

Creditors agreed to write off an additional 219.4 billion won (US$175.24 million) of Asia Motors debt, bringing the total write-off offered to Hyundai on the two companies to 7.39 trillion won.

Hyundai, the country's largest auto manufacturer, had earlier asked creditors to forgive 7.3 trillion won of the two failing firms' debts.

Creditors cut that request to 7.17 trillion won in early November when they endorsed Hyundai's winning bid to acquire a 51 percent stake in both Kia and Asia.

But Hyundai later said it had uncovered new debts of Kia and Asia Motors which exceeded creditors' estimates and it said it would ask for more debts to be written off.

Lee Bang-joo, vice president of Hyundai Motors, declined to reveal the exact amount of additional liabilities Hyundai had found in the two companies and the additional debt it had sought to write off.

Lee told reporters on Thursday Hyundai would accept the creditors' latest offer.

"It's not satisfactory enough but we decided to accept it to normalize operations of the two carmakers as soon as possible," Lee said.

Kia suspended production on some assembly lines from Monday at least to the end of November because of sluggish sales at home and abroad. But production was widely expected to be curtailed on and off through December.

"Given the high level of inventories, we need to suspend production. Normal operation until next month looks unlikely," Kim Sam-sung, a Kia spokesman, said.

An Asia Motors official said his company was also considering curtailing production.

Kim said consumers at home and abroad tended to be delaying or giving up plans to buy Kia cars because of uncertainty in a takeover transition.