Creditors end extending loans to S. Korea's Hyundai Group

16:51, July 08, 2010      

Email | Print | Subscribe | Comments | Forum 

Creditors of South Korea's Hyundai Group said Thursday they decided to halt providing new loans to the conglomerate as it refused to sign the financial reform deal.

According to Hyundai's creditor committee, led by the Korea Exchange Bank (KEB), they informed the 13 creditor banks of the decision, which took effect from local time 9:00 a.m. (0000 GMT).

The decision will have the group's affiliates banned from taking new credits, including loans debt guarantees, the creditors said.

The decision applies to Hyundai Merchant Marine Co., South Korea's biggest bulk carrier, Hyundai Asan Corp., and Hyundai Elevator, while finance affiliates, such as Hyundai Securities and Hyundai Asset Management, are excluded.

The decision came as the group refused the KEB's request to sign the financial reform agreement, while the KEB has asked the group to reach an agreement for three times.

The creditor-proposed plan requires the conglomerate to sell its assets and affiliates to restore the group's financial credibility.

"We are taking a punitive action so as to urge the conglomerate to sign the deal at an early date," an official at the KEB was quoted as saying.

Meanwhile, Hyundai Group is firm on its original position that it will not have the KEB as its main creditor bank anymore and have an evaluation on its financial structure by a new creditor, expected to continue its conflict with the KEB.

The core of the clash lies in the sale of Hyundai Engineering & Construction, the construction firm now held by KEB and other creditor banks, but the Hyundai Group is seeking to take over.

Once the conglomerate is put into the financial restructuring, it will run out of cash that it has been planning to use for the takeover of the construction firm, which is the reason the conglomerate is firmly sticking to a rather radical move, market observers say.

Hyundai Group is in need of taking over the construction firm as it holds an 8.3 percent stake of Hyundai Merchant, the group's de facto holding company, without which the group may be threatened on the control of the bulk carrier.

As South Korea's second-largest conglomerate Hyundai Motor Group, which was split off from Hyundai Group, is now bidding for the Hyundai Engineering, the M&A competition, as well as the clash between Hyundai Group and the creditors, may grow more harsh down the road, according to local analysts.



  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • On Sept. 28, tourists travel around the Mingshashan Scenic Area in Dunhuang, Gansu province by camel. With the National Day vacation right around the corner, more and more tourists from home and abroad are going to Dunhuang. Riding on a camel, they travel in the desert to enjoy the cities rare form of natural scenery. (Xinhua/Zhang Weixian)
  • Chinese forest armed forces work together with forest firefighters on Sept. 28. (Xinhua/Chai Liren)
  • Photo taken on Sept. 29, 2011 shows strong wind blows trees in Sanya, south China's Hainan Province. Typhoon Nesat heads towards south China and is moving at an average wind speed of 20 km per hour toward the west coast of China's Guangdong Province. (Xinhua/Hou Jiansen)
  • A fallen tree is seen on a road in Qionghai, south China's Hainan Province, Sept. 29, 2011. Typhoon Nesat was predicted to land in Hainan later Thursday, bringing heavy rainfalls to the island. (Xinhua/Meng Zhongde)
  • Arash Kamalvand (L) of Iran spikes the ball during the semifinal against South Korea at the 16th Asian Men's Volleyball Championship in Tehran, Iran, Sept. 28, 2011. Iran won 3-1 to advance to the final. (Xinhua/Ahmad Halabisaz)
  • A man visits "Thy Word Is Truth, the Bible Ministry Exhibition of the Protestant Church in China", during its opening at Mount Vernon Place United Methodist Church in Washington DC, capital of the United States, Sept. 28, 2011. Through the Bible's various Chinese versions, ancient or modern, as well as pictures, paintings, calligraphy, art works and historical documents, the exhibition was expected to give an overall understanding of how Bible was brought into China, how it was translated, published, distributed and loved. (Xinhua/Zhang Jun)
Hot Forum Discussion