By Kim Hyun-cheol
Staff Reporter
Conflicts are intensifying between South Korea's Hyundai Heavy Industries and International Petroleum Investment Co. (IPIC) of the United Arab Emirates, over the right to buy a local refiner.
Hyundai Heavy, the second-largest shareholder, retorted to an IPIC statement on April 8 and was confident it will win a legal battle on the case, which is currently under review by the International Court of Arbitration in Singapore, an umbrella of the International Court of Commerce.
In the statement, the state-run IPIC claimed the Korean company was derelict in dealing with its offers for Hyundai Oilbank, and it will demand Hyundai Heavy and its associates sell all their 30 percent stake to the majority holder.
``We reviewed the statement but feel it is not appropriate in many parts,'' an official of Hyundai Heavy said on condition of anonymity. ``The case is in international court now and we are confident we will win the case and own Hyundai Oilbank in the end.''
Hyundai Heavy claimed in the petition on March 25 that it will exercise a deemed offer for the whole 70 percent stake owned by IPIC, which means it offered to buy out its controlling stake.
It also accused the state-run IPIC of breaching its right as primary bidder by processing them arbitrarily even when there was a legal dispute going on between the two companies.
It is likely to take at least a year for the arbitration to be completed, which also means a temporary halt in the sales, he added. The IPIC notified Hyundai Heavy that it will stop attempts to sell off the stake.
The Arab company seriously breached a shareholder agreement which infringed on the Ulsan-based company's rights of engagement in management of Oilbank and its dividends, Hyundai Heavy said. The company, however, declined to reveal the details of the petition because they should be confidential.
Earlier, the world's biggest shipbuilder sought a court injunction on three affiliates of GS Group from acquiring Oilbank stake, after reports came out of an attempted bid from GS Caltex for IPIC-owned shares.
The Abu Dhabi-based IPIC has been on selling off Oilbank, the nation's fourth-biggest refiner. It reportedly tried to pick up a priority bidder among companies like GS Caltex, STX, Honam Petrochemical Corp. and ConocoPhillips.
Oilbank has a refining capacity of 390,000 barrels per day. The nation's No.1 refiner, SK Energy, is capable of refining 1.1 million barrels per day.