No More Shifts on HyundaiThe government has been confused and incoherent in its handling of the Hyundai Construction case. After maintaining for quite a while that the company would be put under court protection when it goes bankrupt, the government recently began to reveal that it intended to help the company to stay as it is.
Economic officials, including Finance and Economy Minister Jin Nyum, have said that they are considering allowing further financing for the company. The apparent readiness of the Korea Land Corporation to accept a consignment to sell Hyundai''s Seosan Farm, even proposing to pay part of the money in advance with loans from the Housing and Commercial Bank, is proof that the government''s new policy is already at work.
It is very difficult to find a resonable solution to the Hyundai case if you consider its enormous size and its outstanding capacity to win foreign contracts. We have no intention of raising an objection, therefore, if the government has changed its policy direction after fully examining the possible effects on the economy. If the company really can get back to its feet on its own, it would certainly be the best solution.
But there seem to be some problems. Mr. Jin, the minster of finance and economy, has changed his position too many times. He started off refusing to allow debt-for-equity swaps. Later, he announced that he would let the company go bankrupt and put it under court protection. Still later, he shifted once more to allow swaps after bankruptcy.
Since he has shifted repeatedly, suspicions that the government has secretly been intending to do this all along have grown to fears about misleading the public.
The most interesting question at the moment is whether the government truly believes that Hyundai Construction has the ability to survive on its own. It will need more than $1 billion to do that and the sale of its farmland will raise only a small fraction of this. If the government is really determined to save Hyundai, its resolute and vigorous support, even at the risk of criticism that it is attempting to dominate the financial sector, will be necessary to persuade the market that Hyundai has a future. But if its direction shifts once more, the result will be disastrous.
Finally, we advise the government to think again about whether Hyundai can continue under its present ownership and management.