Bank now Hyundai unit's top shareholder

Creditors are taking a greater stake in Hyundai Engineering in a bailout plan

By Staff and wire reprots

SEOUL, South Korea - Korea Exchange Bank has become Hyundai Engineering & Construction Co's largest shareholder.

The engineering company's creditors are taking a bigger stake to help turn around South Korea's largest construction company.

Hyundai Engineering also confirmed Monday that it would raise $105.6 million (137.1 billion won) by June to help it pay back maturing debts.

Hyundai group's holdings declining

Hyundai Engineering transferred 41 million shares, or 12.8 percent, of its common stock to KEB, its largest creditor, as part of a debt-equity swap on Saturday. It also swapped 9.6 million shares with Korea Development Bank.

That leaves the Hyundai Group chairman Chung Mong-hun with 9.3 percent of the company.

Hyundai Group's holdings in its flagship company are expected to shrink further as the creditors complete their bailout plan.

HEC's creditors last month agreed to a $2.2 billion (2.9 trillion won) bailout package for the troubled construction company.

The package includes $1.06 billion (1.4 trillion won) in debt-equity swaps. Its creditors have also agreed to buy $1.14 billion (1.5 trillion won) of new Hyundai shares and bonds.

But 19 investment-trust companies are resisting details of the restructuring, which lets collateralized lenders off the hook when it comes to absorbing losses.

Management task force

Hyundai Engineering had debts of 8.1 trillion won at the end of last year. The rescue package aims to cut that to 5.2 trillion won.

Hyundai's creditors met on Friday to set up a task force to oversee Hyundai Engineering and help with two other troubled Hyundai units, Hynix Semiconductor Inc. and Hyundai Petrochemical Co.

The creditors are stepping in to supervise Hyundai Engineering's overseas projects. Problems collecting on overseas contracts led to many of the company's troubles. The creditors have also sent a management team to the engineering company's headquarters.

Hyundai Engineering is still trying to work its way out of debt problems left over from the Asian financial crisis.

A Korean newspaper report suggested Monday that Hynix Semiconductor, formerly Hyundai Electronics Industries, was also looking for a form of debt-equity swap.

According to Dong-a Ilbo, Hynix wants its creditors to buy $770 million ($1 trillion won) in convertible bonds.

Hynix has said it plans to repay 2.7 trillion won of its 5.67 trillion won in maturing debt this year.

Reuters contributed to this report.

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