Hyundai Group Leaks a deal for 72.5% Hyundai E&C Ownership for 1 Trillion Loan

Hyundai Group at risk of losing bid for Hyundai Engineering & Construction if it fails to obey

 

Creditors from Hyundai Engineering & Construction yesterday demanded that Hyundai Group should submit more documents about its controversial 1.2 trillion won ($1.1 billion USD) loan from French investment bank Natixis that helped finance its takeover of Korea’s largest builder.

Creditors said that a loan confirmation document submitted earlier by Hyundai Group was not sufficient to clear up doubts about the loan conditions. Hyundai Group bid 5.5 trillion won to acquire a 35 percent stake in Hyundai Engineering &Construction.

Hyundai Group last week submitted a loan confirmation issued and notarized by Natixis that stated that the group had not pledged shares in Hyundai E&C or its group affiliates as collateral to gain the loan, which would have been in violation of the takeover terms.

But new questions have been raised on whether the person who signed the loan confirmations was not from Natixis but rather its affiliate NexGen Capital and Nexgen Reinsurance.

“We feel that the confirmation that Hyundai Group submitted is insufficient,” the creditors said. They said that Hyundai Group will have to submit additional documents by Dec. 14 or risk losing its status as preferred bidder for Hyundai E&C.

Hyundai said that there are no problems with those who signed the loan confirmation since they hold concurrent positions at Natixis.

NexGen Capital had previously provided financial assistance to Hyundai Group and the Ireland-based company currently holds 5 percent of Hyundai Merchant Marine’s shares. It has been at the center of attention since some believe the loan was backed by NexGen.

“Asking for the loan contract when we have proven everything through the confirmation is unheard of in the history of M&As and is a very irrational demand,” said Hyundai Group officials. Information was published in the local media yesterday that M+W Group, an affiliate of Austria’s Stumpf Group, had demanded acquiring 72.5 percent of Hyundai Engineering in return for providing a 1 trillion won investment as a strategic partner with Hyundai Group for the Hyundai E&C takeover. M+W Group later withdrew its offer as a strategic investor after Hyundai Group rejected the demand.

“We don’t know how the information was leaked, but this is true. But we could not accept this offer and the deal collapsed in the end,” said a Hyundai Group official. “We have no plans whatsoever to sell Hyundai Engineering.”

Hyundai Group is also under pressure by its creditors to sign a financial restructuring program, with the deadline expiring yesterday. Hyundai Group said it is willing to do so, but is asking for more time until the Hyundai E&C deal is completed.

Korea Exchange Bank, the main creditor for both Hyundai Group and Hyundai E&C, recently asked Hyundai Group to sign the financial restructuring plan but Hyundai said the demand was made at the last minute.

Hyundai Group said the timing is inconvenient since it is in the last stages of trying to complete the takeover of Hyundai E&C. “We must concentrate on the deal until it is completed.”

 

By Jung Seung-hyun [seungjung@joongang.co.kr]

http://joongangdaily.joins.com/article/view.asp?aid=2929304