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.