Founder Plans to Sell Hyundai Motor Stake
SEOUL — The Hyundai Group said Sunday that founder Chung Ju Yung will sell a 6.1% stake in Hyundai Motor by the end of the year as part of its restructuring effort.
Hyundai will use the money, expected to be about $200 million, to buy three-year corporate bonds issued by ailing Hyundai Engineering & Construction Co.
“We sincerely apologize for causing concerns to the people and stockholders,” Kim Jae Soo, head of Hyundai’s corporate restructuring committee, said at a news conference. “We will faithfully restructure to earn back the market trust.”
The company’s founder will keep a 3% stake in Hyundai Motor, he said.
The sale of the stake would clear the way for Hyundai Motor to be separated from the Hyundai Group and become an independent company, speeding restructuring and easing the cash crunch at Hyundai Engineering, Kim said.
A typical South Korean conglomerate, is a network of several dozen affiliates interlocked through cross-funding.
By holding large chunks of shares in a few key companies, families influence the entire business group. Fathers place sons in key management posts.
The conglomerates recklessly expanded through cheap loans obtained by collusive relations with past military-backed governments during the nation’s boom years, until the 1980s.
But sales failed to meet investment when the nation was struck by the regional financial crisis in 1997, and some of the weaker ones collapsed, forcing South Korea to accept a $58-billion bailout from the International Monetary Fund.
President Kim Dae Jung’s administration has pledged to restructure the nation’s finance sector and the conglomerates. The Financial Supervisory Commission, watchdog for corporate restructuring, welcomed Sunday’s announcement.
