Hyundai will take over Kia and Asia Motors
Hyundai will take over Kia and Asia Motors
SEOUL (Reuters): South Korea's Hyundai Motor Co on Tuesday
agreed to acquire a 51 percent stake each in Kia Motors Corp and
Asia Motors Co for 1.18 trillion won (US$951 million).
Analysts said the deal would allow Hyundai to gain stronger
ground in the country's car industry but would force loss-making
Samsung Motors out of the business.
"The domestic car industry will transform into the Big Two --
Hyundai and Daewoo Motor -- now that Kia is acquired," said Suh
Sung-moon, a car analyst at Daewoo Securities.
The takeover of Kia and Asia would make Hyundai the world's
10th biggest carmaker with a capacity of 2.5 million units.
Hyundai Motor chairman Chung Mong-gyu and Kia chairman Yoo
Chong-yul signed the contract with payment due in late March.
Hyundai is paying 841.5 billion won for its stake in Kia
Motors and 336.6 billion for Asia Motors.
Hyundai Motor, the country's largest carmaker, won an
international auction to take over Kia and Asia in October.
Chung said his company, the flagship unit of the Hyundai
Group, would soon reveal the business normalization plans for the
troubled carmakers.
"Our inspection team and a foreign consulting firm are
currently working on a normalization plan," Chung told reporters
at the signing ceremony. "We will announce the plan in the near
future."
Chung said Hyundai has not been actively seeking foreign
investments because the formal agreement had not been signed.
"But from now on we will work aggressively to lure foreign
investments," he said.
Chung said several other member firms of the group would take
part in the Kia deal.
Kia and Asia Motors, the core units of the now-defunct Kia
Group, were put under court receivership when they could no
longer service their more than $10 billion in debts.
Company chairman Yoo, the court-appointed administrator for
Kia and Asia, said he would help Hyundai normalize Kia as soon as
possible.
Kia's production returned to normal on Tuesday after some
assembly lines were halted last week, a Kia spokesman said.
Lee Keun-young, president of Kia's main creditor Korea
Development Bank, said Hyundai was required to submit repayment
schedules for Kia and Asia's debt this week. The schedules will
be subject to approval by Kia creditors later this month.
If approved by creditors, payment was expected to be made in
late March next year.
Last Thursday, it was announced creditors had agreed to write
off an additional 219.4 billion won of Asia's debt, bringing the
total write-off offered to Hyundai on the two firms to 7.39
trillion. The combined debt of Kia and Asia stood at 13.89
trillion won as of early November, creditors said.