W20 tril. to be invested in HE&C

By Kang Seung-woo

Hyundai Group plans to spend 20 trillion won by 2020 on Hyundai Engineering and Construction (HE&C), for which it has been designated as the preferred bidder, its chairwoman said Thursday.

“The top priority is to develop Hyundai Engineering and Construction (HE&C) into the nation’s top enterprise. Hyundai Group will invest 20 trillion won in HE&C by 2020 to make the builder a global top five player,” group Chairwoman Hyun Jeong-eun told reporters after her visit to the graves of group founder Chung Ju-yung and former chairman and her late husband Chung Mong-hun in Hanam, Gyeonggi Province. Her visit marked the start of the 12th anniversary of the Mt. Geumgang tour, the group’s flagship of Hyundai’s inter-Korean business.

“We will try to strengthen its footing in green industry and next-generation technologies to transform HE&C into a growth engine of the nation’s future,” she said.

Creditors of HE&C selected Hyundai Group as the preferred bidder for a major stake in the nation’s largest builder over the much-favored Hyundai-Kia Automotive Group Tuesday.

HEC, founded in 1947 by Chung Ju-yung, was the foundation of the former Hyundai Group’s success before being split into three ― Hyundai Motor, Hyundai Heavy Industries and Hyundai Group – in August 2001.

The group is reported to have offered to pay about 5.5 trillion won, or about 141,000 won per share to acquire a 34.88 percent stake of the builder, and since the selection of the preferred bidder, there has been a question mark on the group’s ability to finance the bid.

Tong Yang Securities and French firm Natixis have joined Hyundai Group in the takeover deal as financial investors after M+W Group, a German engineering group, decided to pull out of its planned participation, but Hyun denied the rising doubts on how she will raise the funds necessary for the takeover.

“So far, we have contacted many investors at home and abroad. (I think that) there is no need to worry about it,” she said.

Hyundai has recently raised funds by selling off its interest in southern ports and issuing corporate bonds to finance the stake purchase.

Before the bidding war, the group was involved in a feud with its creditors, led by the Korea Exchange Bank (KEB) over an extension of its debt rescheduling program.

In July, creditors decided not to roll over the group’s maturing loans nor to supply new funding after the group refused to accept their demands to sign a restructuring agreement due to mounting debts resulting from Hyundai Merchant Marine’s heavy losses in 2009.

As a result, Hyundai took the case to court where Hyundai Group was successful, with a ruling saying the sanctions are excessive and have no legal grounds.

However, the creditors recently said that the group still needs to sign a restructuring agreement.

“Hyundai Merchant Marine has been performing well, so I do not think there will be any trouble on the issue,” Hyun said.

Meanwhile, she said that the group will try to fix its damaged rapport with Hyundai-Kia Automotive Group and its Chairman Chung Mong-koo, the elder brother of his late husband.

“We will make efforts to get along from now on,” she said. “I fully respect the chairman and the legitimacy of the Hyundai family still belongs to him.”

During the bidding campaign, Hyundai Group launched a variety of advertisements, slamming the automaker.