Hyundai Group asked to clarify on takeover funding

SEOUL, Nov. 23 (Yonhap) -- Sale managers of Hyundai Engineering & Construction
Co. demanded Tuesday that Hyundai Group clarify the nature of its French bank
deposits to be used to take over a major stake in South Korea's top builder.
Merrill Lynch and the consortium of Korea Development Bank and Woori Investment &
Securities Co., which co-manage the sale of a 34.88 percent stake held by a
handful of banks, sent the letter requiring the conglomerate to respond to wide
suspicion that 1.2 trillion won (US$1.1 billion) deposits in Natixis were
borrowed from other lenders, Korea Exchange Bank (KEB) said in a statement.
Creditor banks, including KEB, on Nov. 16 picked Hyundai Group as the preferred
bidder for the controlling stake in Hyundai Engineering on an assessment that the
group outbid sole rival bidder Hyundai Motor Group and it has enough funding
ability to cover the transaction.
The banks had planned to seal a preliminary acquisition deal by Wednesday but
delayed the agreement by a few days amid rising skepticism that the deposits do
not belong to Hyundai Group's capital assets but were borrowed from others.
Creditor banks said the latest demand will not affect Hyundai Group's status as
the prime bidder, and they plan to sign a memorandum of understanding only after
receiving answers from Hyundai Group.
"The committee of creditor banks has transparently and more tightly screened
Hyundai Group to pick it as the prime bidder and the selection does not have the
possibility of a change," KEB said in a statement.
However, if the group is found to have cheated or breached a law in its funding
plan, the banks will decide the fate of Hyundai Group in accordance with pre-set
rules, KEB said.
Hyundai Group's team-up with Tong Yang Investment Co. has also gone under fire as
some raised suspicion that the group had borrowed 700 billion won from the
brokerage on condition Hyundai Group guarantees investment returns for the
partner. Hyundai Group will also answer to the issue arising from the
partnership, KEB said.
Hyundai Group claimed the deposits justly belong to its capital assets and said
it will take all possible legal actions against those to diffuse unfounded
suspicions.
"It is a very improper behavior to smear a legitimately-chosen prime bidder with
baseless suspicions," a Hyundai Group official said. "If such action constitutes
as an obstruction of the bidding process, (the firm) will take all the civil and
criminal legal actions."
pbr@yna.co.kr
(END)

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