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Hyundai Motor halts proposed governance restructuring plan

ABR Staff Writer Published 23 May 2018

Hyundai Motor Group has halted its proposed governance restructuring plan, after the move was criticized by foreign investors including Elliot Management.

The restructuring plan was expected to have given more power to Hyundai Group Chairman Chung Mong-koo’s son Euisun Chung.

As part of the restricting plan, Hyundai Motor Group planned to sell 30% stake in Hyundai Glovis and buy more shares in Hyundai Mobis.

Hyundai Glovis is the vehicle-shipping and logistics arm, while Hyundai Mobis is the auto parts supplier.

Hyundai stated that the restructuring move could have simplified its circular shareholding, a move which could have made hereditary transfer of power in the company with 56 subsidiaries and over $200bn in assets.

In Hyundai Mobis, Euisun Chung has no stake.

The opposition from investors in the group including Elliot and others has led the company to drop the plan.

The company dropped the restructuring plan stating that there is an element of uncertainty about receiving support from shareholders. It has also cancelled its scheduled meeting to be held on 29 May 2018.

Had the deal been put up for voting, it would have needed two-thirds majority to pass, which meant that foreign investors in the company with a combined stake of 49% in Hyundai Mobis, could have blocked it, Financial Times reported.

Hyundai Motor Company vice chairman Euisun Chung said: "After a thorough review, the relevant members of the Hyundai Motor Group, having listened carefully to the various opinions and candid advice from their shareholders and the market, ultimately found it necessary to postpone the restructuring.

“Hyundai Motor Group will continue to make every effort to engage its shareholders and the market in a transparent manner in the development of an updated plan."

The ownership restructure was announced back in March and the plan included a series of deals, responding to calls from the government and investors to reduce circular ownership structures.

Hyundai stated that it will enhance its business competitiveness and improve corporate value throughout the group and strengthen communications with its shareholders and the market to live up to their expectations.

Image: Hyundai Motor headquarters in Korea. Photo: Courtesy of HappyMidnight/Wikipedia.org.