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Issue #590 | Perishables | Mediterranean | Middle East | Africa Trade

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2014 Media Kit
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S.Korea’s Hyundai Group aims to raise $3 bln; selling finance units

By: | at 12:49 AM | Liner Shipping  

SEOUL, Dec 22 (Reuters) - South Korea’s Hyundai Group said on Sunday it plans to raise more than 3.3 trillion won ($3.11 billion) by selling off its three financial units and taking other steps to ease concerns over affiliates’ high levels of debt.

Hyundai Securities Co Ltd will be among the units offered for sale, the group said in a statement.

Hyundai Group affiliates have been under increasing strain to support loss-making shipping line Hyundai Merchant Marine Co Ltd due to falling profit margins, as well as pressure from creditor banks such as Korea Development Bank (KDB) to refinance.

Hyundai Merchant Marine Co Ltd reported a total net loss of 345.6 billion won ($325.67 million) in the first three quarters of 2013, as well as yearly net losses in 2011 and 2012 due to a slump in the global shipping industry.

“We have come up with preemptive and voluntary measures to ease market concerns, even though we will have enough cash by the first half of 2014,” the statement said.

The statement added it would focus on shipping, logistics, manufacturing and inter-Korean business projects in the future.

Hyundai Group’s affiliates include Hyundai Merchant Marine Co Ltd, Hyundai Elevator Co Ltd and Hyundai Logistics Co Ltd.

Hyundai expects that its latest measures would help to cut debt ratio of its three key affiliates from nearly 500 percent to roughly lower than 300 percent, the statement noted.

South Korean lenders such as KDB took a hit on their balance sheets this year as affiliates of smaller local conglomerates such as shipbuilding-to-shipping STX Corp and cement-to-brokerage Tong Yang buckled under slumping market conditions in sectors such as shipping and construction, while refinancing costs rose as investors lost confidence.

Separately, Korean Air Lines Co Ltd said last week it had planned to raise 3.5 trillion won ($3.33 billion) over two years by selling assets such as shares in refiner S-Oil Corp, to pay off debt and support loss-incurring affiliate Hanjin Shipping Co Ltd. ($1 = 1060.1000 Korean won)