Foothold Businesses

Hyundai Group Chairman Hyun Jeong-eun poses with late North Korean leader Kim Jong-il (second from right) in 2005 during a meeting about resuming the Geumgang Mountain tourism business.
Hyundai Group Chairman Hyun Jeong-eun poses with late North Korean leader Kim Jong-il (second from right) in 2005 during a meeting about resuming the Geumgang Mountain tourism business.

 

The Hyundai Group has been done with self-restructuring strategies including the selloff of Hyundai Logistics, and the protected shipping and North Korea businesses.

The Hyundai Group has kept the shipping and North Korea businesses and created a foundation for rejuvenating those businesses even while selling off the financing and logistics facets of their operation. This shows Chairman Hyun Jeong-eun’s strong determination not to give up the shipping business, in which Hyundai Group is rooted, and the North Korea businesses following the dying wishes of her husband, Jung Mong-hun.

Hyundai Group announced on July 17 that they sold their entire shares of Hyundai Logistics (88.8 percent) at 600 billion won (US$584 million) through a special purpose company (SPC) jointly established by Orix Corporation, a Japanese financial institution, and the Hyundai Group.

The Hyundai Group has now completed 80 percent of its 3.3 trillion won (US$3.2 billion) worth self-restructuring strategy announced in December last year. According to industry sources, the Hyundai Group created a foundation to overcome a liquidity crisis through preemptive restructuring, emphasizing practical interests ahead of justifications.

The Hyundai Group decisively gave up three financial companies - Hyundai Securities, Hyundai Savings Bank, and Hyundai Asset Management - which have produced high cash flow relative to profits as a main part of the group. Hyundai Group originally planned to maintain management control over Hyundai Logistics through an initial public offering (IPO), but decided to sell it instead to secure more cash. An official at Hyundai Group explained, “Profits from the selloff were greater than the IPO, and Orix proposed good conditions just in time. Top management executives changed their ideas very quickly for this selloff.”

Hyundai Group achieved more than expected in restructuring, as they enhanced liquidity and lowered the debt ratio through preemptive actions, stronger than previously planned. An insider at Hyundai Group emphasized, “We will regain the market credibility and prepare for future growth.”

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