Chung, Affiliates to Bow Out To Ease Separation of Hynix

In order to ease the separation of Hynix Semiconductor Inc. by June, Hyundai affiliates and Chung Mong-hun, the chairman of Hyundai Asan Corp., have agreed to give up their voting rights and sell their stakes in the chipmaker.

One affiliate, Hyundai Heavy Industries notified the Financial Supervisory Commission on Tuesday of a draft of a contract for the sell-off authorization.

Hynix's main creditor, Korea Exchange Bank, and other Hyundai affiliates such as Hyundai Merchant Marine and Hyundai Elevator, plan to draw up a formal contract after a legal review.

The draft calls for the affiliates and Mr. Chung to turn over their stakes to Korea Exchange Bank and entrust the sales of the stakes to the creditor and Salomon Smith Barney, the chipmaker's financial adviser.

But the contract also stipulates that the trustees cannot sell the stakes until nine months after the agreement is signed. The affiliates demanded that the stakes be sold after Hynix resumes normal operation and its stock price recovers, a Hyundai Group official said.

But it is uncertain if the Fair Trade Commission would recognize a spin-off in such a form. When Hyundai Motor was separated from the Hyundai group last August, the antitrust watchdog recognized the spin-off only after Hyundai founder Chung Ju-yung's stake was sold. "There is no precedent for recognizing a spin-off after just voting rights are given up and a stake sale is authorized," an official at the agency said.

by Kim Won-bae