Court upholds aborted Hyundai E&C sale
By Chris Sleight04 January 2011
Hyundai Group has lost an appeal that would force Korea Exchange Bank (KEB) to sell its 35% stake in Hyundai Engineering & Construction (E&C). This may open the door to a rival bid for Hyundai E&C from car manufacturer Hyundai Kia Automotive(formerly Hyundai Motor), a separate part of the Hyundai conglomerate.
Hyundai Group filed the injunction with Seoul Central District Court in December after KEB walked away from the KRW 5.5 trillion (US$ 4.9 billion) deal, despite a Memorandum of Understanding being in place. The deal was dropped because of concerns over Hyundai Group's ability to finance the acquisition. Local media report that a key problem was that Hyundai Group would not disclose details on a KRW 1.2 trillion (US$ 1.06 billion) loan from French bank Natixis that was to be used to finance the acquisition.
The sale of a 35% stake in Hyundai E&C was launched in September last year and the two leading bidders were rival factions of the Hyundai business empire. Hyundai Group has long stated its wish to re-acquire Hyundai E&C, which was spun-off from the group in 2001 following the death of its founder, Chung Ju-young. Hyundai E&C was the first group company Mr Chung set up in 1947.
Hyundai Group is currently chaired by Hyun Jeong-eun, the widow of Chung Ju-young's fifth son and heir-apparent, Chung Mong-hun, who committed suicide in 2003 following a conviction for embezzlement and illegal money transfers. Hyundai Kia Automotive meanwhile was headed by another of Chung Ju-Young's sons, Chung Mong-koo, until 2006, when he was investigated and subsequently convicted on corruption charges. The company is now headed by his former vice-chairman & CEO, Kim Dong-jin.