Seoul rejects Hyundai's new restructuring plan

Seoul rejects Hyundai's new restructuring plan

SEOUL (AFP): South Korea's government has rejected a new restructuring plan by the giant Hyundai Group, urging it to abide by an earlier promise to spin off its automaking unit, officials said Saturday.

The Fair Trade Commission (FTC) has turned down a request from Hyundai for permission to retain Hyundai Motor Co. within the group and split 25 non-auto affiliates from the group instead under a newly drafted restructuring plan.

The Hyundai Group on Friday filed applications to realign the sprawling empire with the FTC under the laws on fair trade.

It said the group founder, Chung Ju-Yung, would be the controller of the remaining 11 auto-centered units while one of his son, Chung Mong-Hun, would leave the group with 25 non-auto units.

But the FTC rejected the plan as a ploy aimed at expelling Chung's eldest son, Chung Mong-Ku, from the driver's seat of Hyundai Motor and retaining the empire under two different names.

It noted that Chung Ju-Yung has appointed Chung Mong-Hun to succeed him as the chairman of the group.

Chung Mong-Ku, who currently controls the Hyundai Motor Co. and auto-related units, has been estranged from his father and Chung Mong-Hun after he said he would leave the group with the auto units.

"It would fit the legal concept of a group separation better should the Hyundai Motor and its affiliates be spun off from the Hyundai Group which is controlled by Chung Mong-Hun," the FTC said in a statement.

FTC demanded Hyundai keep to the promise to creditor banks that it would separate automobile subgroup by lowering Chung Ju- Yung's share in Hyundai Motor from the current 9.1 percent to below three percent.

The Hyundai Group has come under criticism from creditors and economists as the feud among the father and the two sons delayed the group's much-needed restructuring.