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[Super Rich] Hyun Jeong-eun’s struggles continue

Hyundai Group chairwoman sells assets, chips in own money to keep business afloat

Hyundai Group Chairwoman Hyun Jeong-eunYonhap
Hyundai Group Chairwoman Hyun Jeong-eunYonhap

Hyundai Group chairwoman Hyun Jeong-eun has made headlines for the past couple of months with her struggles to keep the country’s 29th-largest business conglomerate running.

On Feb. 23, she spent 30 billion won ($24.4 million) from her own pocket to acquire 4 million shares in Hyundai Merchant Marine’s new stock issue, which was planned as part of the group’s efforts to ease a liquidity crisis.

To secure more liquidity, she is trying to sell Hyundai Securities, a brokerage arm of the group, in an auction that recently closed its preliminary round of bids.

And Hyun is fighting against Schindler Group, the second-largest shareholder of Hyundai Elevator, over the control of the elevator firm, which is one of a handful of businesses that bring in solid profits for the troubled group.

Moreover, the shutdown of the Gaeseong industrial park in North Korea and the subsequent chilling of relations between the two Koreas has dealt a harsh blow to the group’s backbone, Hyundai Asan. 

“Hyun was often dubbed as the ‘Joan of Arc’ in the business world, tackling one crisis after another with guts and brains. And it is time that she justifies that moniker and prove that she is the true controller of the business,” a rather doubtful onlooker said.

“She will now have to juggle the huge responsibility of keeping the legacy of Hyundai Group, which used to be one of the country’s top two business conglomerates until the ’90s, and business profitability that would keep the company going for the next hundred years,” he added.

From widow to tycoon

Such concerned looks have lingered around Hyun for the past 13 years, since she took over in 2003 succeeding her late husband, Chung Mong-hun, former Hyundai Group chairman. Chung inherited the company from his father and Hyundai Group founder Chung Ju-yung in 1998.

Hyun stepped up as chairperson, after her husband passed away in the middle of an investigation over whether his company had provided the previous administration with unlawful funds to open up business opportunities across the North Korean border. It was a clear act of rebellion against the patricentric Chung family tradition, which had kept women away from business activities.

Chung Ju-yung famously called up the entire family to his house every morning at 5 a.m., made the women cook and then eat in the kitchen while the men ate in the dining room. He encouraged women to study -- Hyun received a master’s degree from Fairleigh Dickinson University in New Jersey -- and sons to marry women they loved instead of arranged marriages, but he did not delegate duties to the women of the family.

And even though Hyun declared she would inherit Chung Ju-yung and Chung Mong-hun’s legacy, her leadership has often been challenged by her kin.

In 2003-2004, Chung Ju-yung’s younger brother and KCC honorary chairman Chung Sang-young attempted to grab the reins of Hyundai Group by becoming the largest shareholder. In 2006, Hyundai Heavy Industries’ largest shareholder and Chung Mong-hun’s younger brother Chung Mong-joon was rumored to oust his sister-in-law after Hyun attempted to issue more stocks in HMM that could dilute Chung Mong-joon’s influence.

In 2004 as a counter to Chung Sang-young’s attack, Hyun openly suggested that Hyundai Elevator could become a public company by issuing stock available directly to the public, excluding large investors. And in 2006, she orchestrated Hyundai Elevator in acquiring HMM stocks, protecting her reign once again.

And despite the government’s ceasing cross-border tours to North Korea’s Geumgangsan Mountain in 2008 when a tourist was shot dead without notice, Hyun remained the businessperson most contacted by the North. She even received a letter of condolences from Kim Jong-un in 2013 at the memorial ceremony for Chung Mong-hun.

Her efforts paid off at one point.

HMM posted its first profitable quarter in five years in the first quarter of 2015, following severe downsizing in the previous year. Hyun in the same year was named one of the “Most Powerful Women of Asia-Pacific” by Fortune magazine for the second consecutive year for leading “a complex empire of 20 affiliated, family-controlled companies.”

Hyundai in crisis

However, the long-hauling global economic slowdown has dragged Hyundai into a protracted slump.

The group’s signature business HMM saw equity capital more than halve, after posting more than 490 billion won in operating losses in 2014 and 2015 combined. Sliding freight rates and global trade makes for a duller picture for the company, pundits say.

And because Hyundai Elevator has been supporting HMM for a while, its shareholders have openly denounced the management. The Gaeseong industrial park shutdown has also poured salt on its wounds.

Hyundai has announced that it will seek to sell its bulk business and other assets, which will allow the group to raise another 500 billion won. Hyundai’s brokerage unit, Hyundai Securities, is expected to bring some 600 billion won, providing a shot in the arm. HMM has also been in talks with shipping companies to get a discount in their ship usage fees.

“We are currently going as scheduled, holding negotiations for sales of companies and discounts on fees, and trying to seek everything we can,” a Hyundai Group spokesman said.

Hyun also spoke up about the North Korean business.

Though the company had to downsize Hyundai Asan by more than a quarter, the chairperson stressed that the business with the North would be the surest way to “lead the unification and the next chapter of (Korean) history.”

Hyun’s uncle and ruling Saenuri Party chairman Kim Moo-sung also joined in to help, urging the government to support shipping companies as a basic industry of Korea.

Some pundits point out that the situation Hyun is faced with is different from previous hardships.

“Before, Hyun suffered what could be seen as internal strife. But what she is seeking is an inevitable global phenomenon. Will she be able to tackle this without using political strategy? That’s what she needs to show us now,” an analyst, who declined to be named, said.

By Bae Ji-sook (