Hyundai Group to sell financial firms through special-purpose company
Published : 2014-02-05 13:47
Updated : 2014-02-05 13:47
Hyundai Group, which announced in December it was selling off its financial units to raise cash, is expected to seek sales through a special purpose company, sources watching the arrangements said Wednesday.
Sources said the business group, a family-run conglomerate that specializes in elevator and container services, wants to hand over Hyundai Securities Co., one of South Korea's largest brokerage houses, Hyundai Asset Management Co. and Hyundai Savings Bank Co. to an SPC operated by Korea Development Bank, its main creditor.
Hyundai owns a 36 percent stake in Hyundai Securities, which it said is worth up to 700 billion won ($649 million). Market estimates, on the other hand, put the actual worth at no more than 400 billion won.
Hyundai Asset Management Co. and Hyundai Savings Bank Co. are fully owned subsidiaries of the brokerage firm.
Hyundai at the same time plans to sell off real estate and other holdings individually as part of its self-help restructuring program announced in late December to overcome its liquidity crunch and win back market trust.
The conglomerate had said it wants to generate 3.3 trillion won in cash by selling its financial firms and various properties such as shipping terminals owned by Hyundai Merchant Marines, its core business affiliate.
Sources said Hyundai and KDB plan to select a company soon that will take charge of selling the financial firms. This will be followed by a due diligence process to assess the exact worth of the companies.
"Once this is done, KDB can move to pay Hyundai through a private equity fund arrangement and then take steps to sell the firms," a source said.
Hyundai must pay back 420 billion won in corporate bonds as well as the 400 billion won in commercial papers, which all come due this year.
On other measures planned by Hyundai, sources said the group may list Hyundai Logistics Co. on the over-the-counter KOSDAQ exchange this year, which can generate cash for the group.
Sales of property such as the Banyan Tree Hotel in Seoul is being considered, although Hyundai may be hard pressed to recover 165 billion won it spent to buy the resort.
Analysts at Korea Investors Service, an affiliate of Moody's Investors Service, predicted that if sales of the financial firms move forward as planned along with asset sales, Hyundai should not have problems meeting its debt obligations this year. But depending on how the sales proceed, stability of the conglomerate's key shipping services may be negatively affected, they said. (Yonhap News)