Hyundai Elevator Co., South Korea's top moving solutions provider, said Sunday that Schindler Holding AG's teleconference last week aimed only to divert blame for its losses and failed merger and acquisitions (M&A) plan.
In a press release, the elevator company blasted the Swiss firm, which is its second largest investor, for trying to distort basic truths in their business relationship.
"The global teleconference held Friday ahead of Schindler's board meeting was one long show full of lies and sophistry that aimed to cover up the holding company's failures to take over Hyundai's elevator business for the past 10 years," the South Korean company said.
It pointed out that Schindler was well aware of the Hyundai's circular shareholding arrangement and the various derivatives contracts by the time its share in the elevator company reached 35 percent in 2010.
The holding company claimed the derivatives contract taken out by Hyundai Elevator has been used to help Hyundai Merchant Marine, a key linchpin in the ownership arrangement of Hyundai Group and keep its chairwoman Hyun Jeong-eun in control. It said the contracts have hurt Hyundai Elevator investors.
Both Hyundai Elevator and the shipping company are part of the larger Hyundai Group, one of South Korea's family-run businesses.
The Swiss company has taken Hyundai's top managers to court for damages triggered by its derivative deals, It has asked for reparation of over 700 billion won (US$650 million).
"Schindler did not raise complaints when the shipping business was doing well and when it was making money, and only started to complain when things started to go sour," Hyundai said.
Schindler, the world's No. 2 elevator and escalator company, started buying Hyundai shares in 2006 and was viewed as a friendly investor at first, with the two companies even exchanging a letter of intent to set up a joint venture.
The South Korean business also pointed out that the letter of intent (LOI) fell through by mutual consent.
Hyundai has since declined to spin off its elevator business and give it to the joint venture, which, according to the original LOI, would have been controlled by Schindler.
The local company, moreover, said Schindler's decision to boycott the paid-in capital increase plan and move to sell its preemptive rights for new shares, can only be seen as an attempt to cause further problems for Hyundai.
"The move can cause stock prices to fall and hurt the financial situation of the company, and this may cause creditor banks and state regulators to intervene," the company said. It said such a development may be what Schindler is hoping for so it can make another attempt to take over the elevator business.
Hyundai added that despite what Schindler is saying, it has answered all correspondences with its investors in a diligent manner. Schindler has said repeatedly that it has been shut out of the decision making process and was not getting any response to the many letters it has been sending to Hyundai.
"We are seriously contemplating taking action against the spreading of lies by the holding company," a corporate source said.
Others said Hyundai Elevator, as the only remaining local lift manufacturing company, enjoys global competitiveness in terms of quality and engineering excellence.
They said that while sluggishness in the global shipping business has affected its affiliate and the elevator company, as a whole, the self-help program underway will allow the business to recover and become stronger down the line.(Yonhap)