HHI sells hotel subsidiary for 200 billion won

Hyundai Heavy Industries Group sold its hotel subsidiary to a private equity fund to fulfill restructuring goals proposed last year amid a prolonged order drought in the global shipbuilding market, the company said Wednesday.

According to the shipbuilding group, all shares of Hotel Hyundai have been sold to Hahn & Company, a local private equity fund, for 200 billion won ($178 million). The deal was made with the condition that the fund guarantees the employment of the current workforce, Hyundai Heavy said in a statement.

The fund, founded in 2010, is one of the largest private equity funds in the country and operates over 4 trillion won in assets.

Hyundai Heavy Industries Group proposed a 3.5 trillion won restructuring plan in June last year and hoped to achieve 1 trillion won of its target this year through a series of asset sales.

Earlier this year the shipbuilding group pushed forward an initial public offering of its shipbuilding affiliate Hyundai Samho Heavy Industries, raising 400 billion won. In June the group also made an additional 350 billion won as Hyundai Mipo Dockyard sold its holding shares in Hyundai Robotics, the holding company of the group, to rid itself of a complicated cross-shareholding structure among affiliates.

“Including sales of Hotel Hyundai we have carried out nearly 90 percent of our proposed target [of 1 trillion won] to generate 3.5 trillion won through corporate restructuring,” a spokesperson from Hyundai Heavy Industries Group said. “We will continue to carry out management improvement measures and sell non-core assets to fully restructure our business.”

Since last year the shipbuilding group has been selling its stakes in companies like Hyundai Motor and Posco. In April the group spun off affiliates unrelated to shipbuilding such as electric and energy systems, construction equipment and robotics to enhance the competitiveness of each business division as well as to improve the financial stability of the group.

The shipbuilding giant is planning additional sales of non-core assets in the latter half of this year. As the group decided to pull out of the financial sector, it is in the progress of selling off Hi Investment & Securities. The sale or liquidation of non-performing units including construction equipment engine maker Hyundai Cummins, wind power gear box maker Jake in Germany and custom power generator designer Hyundai Ideal Electric are also in the final stage.

“When all sales and restructuring projects are finalized, we may see more than 3.5 trillion won generated by the end of next year,” the spokesperson added. Next year is the deadline for the restructuring plan set by the group’s creditors, led by KEB Hana Bank.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]