By Kim Rahn
Schindler Holding AG Monday hinted at selling its 30.89 percent stake in Hyundai Elevator, crying foul over Hyundai’s alleged move to cover its affiliate’s losses.
The Swiss elevator maker said through its public-relations agency that it won’t take part in Hyundai Elevator’s capital increase planned for this month.
The elevator arm of Hyundai Group aimed to increase capital worth 194 billion won ($179 million) by issuing 6 million shares.
By not participating in the increase, Schindler’s stake in the firm will drop to around 21 percent.
“Regardless of the stake in Hyundai Elevator, it is clear that the Korean market is important in Asia. But Schindler has lost trust in the company’s executives including Hyundai Group Chairwoman Hyun Jeong-eun and Hyundai Elevator CEO Han Sang-ho,” Yvonne Park, managing director at Fleishman Hillard, the agency for Schindler, said in a media briefing in Seoul.
Park said Schindler suffered from 260 billion won in losses last year from Hyundai Elevator’s stock price decline — an amount equivalent to one-fourth of Schindler’s operating profits.
She said a series of capital increases has not helped improve Hyundai Elevator’s financial structure.
Schindler claims the increase is aimed at covering losses arising from derivative contracts in which Hyundai Elevator promised to support the group’s other subsidiary, Hyundai Merchant Marine, when the marine firm’s stock price falls.
“A huge portion of the increase will be spent for helping the group maintain managerial control of the marine arm, which is not helpful to Hyundai Elevator,” she said.
Last month, Schindler filed a lawsuit to demand that four executives of Hyundai Elevator compensate for the losses they inflicted on the elevator unit by deciding on the derivative contracts. It was the sixth suit which Schindler lodged against Hyundai Elevator.
About the suits and complaints raised by Schindler, Hyundai has claimed Schindler aims at taking over the elevator unit by attempting to drive it into a liquidity shortage and other troubles so the group will have to sell it.
A Hyundai Group official said if Schindler sells its shares in Hyundai Elevator, it means a threat to the elevator unit’s managerial rights will disappear.
“If so, Hyundai Elevator will be able to spend its funds, which it has had to use to defend its managerial rights from a hostile M&A attempt, in facility investment and other normal operations of the company. It will be helpful to the company’s development,” he said.
However, he noted the possibility of Schindler selling the stake to a single person or company, and that new entity becoming a threat to Hyundai Elevator’s managerial rights.
While Schindler now holds 30.89 percent in stake, Hyundai Group and its affiliate hold 39.7 percent, including Chairwoman Hyun’s 1.17 percent.
Hyundai Elevator and Schindler’s ties started in 2004 when the two agreed to set up a joint venture on elevators and escalators here. But the agreement was canceled due to domestic regulations and Schindler purchased a 25.5-percent stake in Hyundai Elevator in 2006 from KCC, while they still maintained a good partnership.
But in 2010, they clashed over Hyundai Group’s attempt to take over Hyundai Engineering & Construction, which Schindler opposed. Schindler then bought more shares in the elevator unit and filed a series of suits and petitions against the firm and the group.
Kim Rahn is the managing editor of The Korea Times. Since joining the company in 2003, she has covered various beats including the presidential office, Seoul city government, the Bank of Korea and the tourism industry. In 2014, she won the Society of Publishers in Asia (SOPA) award for her coverage of the ordeals of migrant women in Korea.