KCC buys stake in Hyundai

Kumkang Korea Chemical disclosed on the Korea Stock Exchange yesterday that it bought a 7.5 percent stake in Hyundai Elevator, intensifying speculation that KCC Group Chairman Chung Sang-young is jockeying for control of the de facto holding company for the Hyundai Group.
Hyundai Elevator rose 4 percent to close at 79,000 won ($67).
KCC Group ― which is headed by Chung Sang-young, who is late Hyundai Asan Chairman Chung Mong-hun’s uncle ― has thus secured 10.6 percent stake in Hyundai Elevator, including the 3.1 percent stake that Kumkang Korea Chemical and Kumkang Construction bought in August, to become the third largest shareholder in Hyundai Elevator.
Kim Moon-hee, mother-in-law of the late Hyundai Asan chairman, is currently the largest shareholder with 18.6 percent.
Shinhan BNP Paribas Investment Trust Management is the second with 12.8 percent.
However, according to industry sources, the 12.8 percent held by Shinhan BNP is under the control of KCC Group’s chairman. If that is the case, then Mr. Chung would control more than 20 percent, making him the largest shareholder of Hyundai Elevator.
Hyundai Group held an emergency executive meeting. “It was confirmed that Chung Sang-young’s side is accumulating shares. We are striving to find measures to defend our management control,” a Hyundai official said.
“If there is any evidence that Chung Sang-young’s side breached related laws in stock trading, we will seek legal redress.”
Hyundai is also considering asking help from the old subsidiaries of the Hyundai Group in defending its management.
The current chairman of Hyundai Elevator is Hyeon Jeong-eun, widow of the late Chung Mong-hun. She became head of the firm Sept. 21 after her mother, Kim Moon-hee, entrusted the voting rights of her stake to her daughter, a move that did not please Chung Sang-young.
Mr. Chung sent a message to the Hyundai Group that “the management strategy team at Hyundai must be closed. A stronger leadership is also necessary, which could be done by appointing new executives,” according to a KCC official.
The KCC official also said Mr. Chung told the company, “The Chung family will succeed the tradition of Hyundai Group. Why doesn’t Ms. Hyeon get a subsidiary she wants and part from the rest of the group?”
A Hyundai official said, “We feel grateful for Mr. Chung’s help. But the remaining family of the late Chung Mong-hun will be in charge of management, which was his wish.”
As Ms. Hyeon rose to the top of management, Chung Sang-young’s camp told the Hyundai Group to recover the 12.6 percent stake in Hyundai Elevator that Chung Mong-hun had put up as a collateral when borrowing 29 billion won from his uncle.
Hyundai Group said that it is considering taking the collateral back, which some analysts said prompted KCC Group to move quickly to increase it stake in Hyundai Elevator.

by Koh Yun-hee