Stock Slash Passes Test

After a court ruled Wednesday against minority shareholders of Hyundai Engineering & Construction, it would seem to be a simple task to get shareholders to agree to a write-down of capital for the troubled builder at a special shareholders' meeting scheduled for Friday.

Opposing the planned write-down, some minority shareholders complained about the transfer of 50.62 million shares, a 15.5-percent stake, by Hyundai Construction last month to its main creditor, Korea Exchange Bank, and the state-run Korea Development Bank. The small shareholders said the move strengthened creditors' voting rights at their expense, and asked the Seoul District Court on April 25 for an injunction against the exercise of voting rights of the transferred shares.

But the court dismissed the case Wednesday, saying the transfer was not illegal because it was approved by the company's board.

With the extra voting clout the court gave Hyundai's creditors, observers say it will be relatively easy to garner the two-thirds majority of shares voted at the meeting and a one-third plurality of all the builder's shares.

A Hyundai Construction representative said the company has already obtained support of 36 percent of the total shares with voting rights in the builder, including shares held by creditors, and the 23.3 percent stake held by Hyundai affiliates.

Creditors agreed last month to write down the capital of Hyundai Construction held by minority shareholders to about one-sixth of their former value, while reducing the equity held by the largest shareholders to zero.

by Kim Won-bae