Hyundai Motor missed a deadline on its holdingsThe Fair Trade Commission on Thursday warned Hyundai Motor Group that it missed a deadline for straightening out cross shareholdings of its two steel affiliates.
The group was given six months to sell off the cross shareholdings after Hyundai Steel and Hyundai Hysco merged as a single company last July.
The deadline for selling the stakes was Jan. 4. However, it took a month longer, until Feb. 5, for Hyundai Motor Group to resolve the issue.
It was the first violation of a law that bans conglomerates from creating new cross shareholdings or strengthening existing cross shareholdings since it was implemented by the government in July 2014.
According to the antitrust agency, in the process of merging the two steel companies, the stakes owned by Hyundai Motor and its biggest affiliate, Kia Motors, sharply increased.
When Hyundai Hysco was merged with Hyundai Steel, Hyundai Motor received a 4.31 percent stake of Hyundai Steel or 5.74 million shares in exchange for 6.69 million shares, or a 29.37 percent stake, that Hyundai Motor had in Hyundai Hysco. As a result, Hyundai Motor’s shares in Hyundai Steel increased from 9.17 million shares, or a 7.87 percent stake, to 14.9 million shares, or 11.18 percent.
The situation was the same for Kia Motors. Kia Motors received 2.29 percent of Hyundai Steel’s new shares, or 3.06 million shares, in exchange for the 3.57 million shares, or 15.66 percent, it had in Hyundai Hysco.
As a result, Kia Motor’s ownership in Hyundai Steel shares increased from 23 million to 26.11 million shares. However, the ownership of stakes by ratio didn’t change much. Previously, Kia Motors owned 19.78 percent of Hyundai Steel. After the two steel companies merged, its stake in Hyundai Steel decreased to 19.57 percent.
Hyundai Motor and Kia Motors sold off their increased shares in Hyundai Steel through a block deal in February.
Hyundai Motor and Kia Motors sold 8.8 million shares worth 443.9 billion won ($372.9 million), or a 6.6 percent stake, to NH Investment & Securities.
BY LEE HO-JEONG [email@example.com]