Court rejects Hyundai Group suit for builder

Court rejects Hyundai Group suit for builder

By Kim Da-ye A Seoul court rejected Hyundai Group’s request to keep alive its preliminary deal signed with the lead creditor of Hyundai Engineering & Construction (HE&C) to acquire the builder. The Seoul Central District Court ruled Tuesday that the cancellation of the memorandum of understanding (MOU) the group and Korea Exchange Bank (KEB) signed was legal because the group did not fulfill its duty to submit documents requested by the latter. Hyundai Group said it will appeal the decision, while associated KEB creditors said they will hold a meeting soon to decide if they will proceed with negotiations with the rejected bidder, Hyundai-Kia Automotive Group. The auto group, led by Chung Mong-koo, separated from Hyundai Group a decade ago. Hyundai Group is headed by his brother's widow, Hyun Jeong-eun. Suspicions over the group’s 1.2 trillion won loan from French bank Natixis - a pivotal part of the funding to purchase a 34.88 percent stake in the builder - had been raised, pushing the group to submit a copy of the agreement. The group refused to do so, and instead handed in letter-type documents that confirmed it did not provide shares of its affiliates and HE&C as collateral for the loan. The court said that part of the first document issued by Natixis, confirming no HE&C shares were committed as collateral, was unclear and that creditors were justified to raise questions about Jerome Biet and Francois Robey who were both signatories of the document. Biet and Robey are directors at Nexgen Capital Ltd. and Nexgen Reinsurance Ltd., respectively, while the group claimed they also belonged to Natixis. It had been widely speculated that Nexgen Capital, which belongs to Natixis’ affiliate, Nexgen Financial Holdings, backed up the loan. The court criticized all three parties involved in the acquisition - the creditors, Hyundai Group and Hyundai-Kia Automotive Group - for having created problems concerning the acquisition. “Creditors were easily influenced by suspicions raised by the Hyundai Motor consortium and the press, and showed an irregular attitude by reversing principles,” the court said in a statement, adding that the automaker caused much chaos by continuously raising suspicions over Hyundai Group’s preferred bidder status. Hyundai Group needs to acquire the builder partly because HE&C owns an 8.3 percent stake in Hyundai Merchant Marine (HMM), its flagship company. If Hyundai-Kia Automotive Group takes over HE&C, it is assumed that it will try and wrest control of HMM. Hyundai Group previously rejected a suggestion by creditors to help retain control of HMM. As the injunction request has been dismissed, the creditors are expected to proceed with negotiations with the automaker while attempting to mediate between the two rivals to help Hyundai Group defend its managerial rights in HMM. Creditors told the court that they won’t begin negotiating with the automaker until Jan. 7.

kimdaye@koreatimes.co.kr