Will Chung Relent for Hyundai?Instead of moving towards a solution, the Hyundai Engineering and Construction problem is growing ever more complicated. The government maintains its threatening tone and appears all but ready to make a final decision. Company executives and Chairman Chung Mong-hun are adamant they do not want court protection or to have loans converted to capital. As the issue pushes the national economy to a critical point, the parties involved appear concerned only with their personal gains and losses.
We again urge the government to take a firm action. This is not the time to sit around waiting for other Hyundai subsidiaries or the Chung family to save the day. This is not consistent with the principle of independent management, and the rescuers might well go down with the company they are trying to rescue.
There are limits to the sacrifices creditor banks can make, and non-bank creditors will not wait forever for a solution just because the government asks them to wait. And it is clear that the creditors'' sacrifice and patience are not enough to resurrect the company. Once the company goes down, its shareholders, employees, creditors and affiliates that put up security will suffer. The more a decision is delayed, the more the potential damage grows.
There are suggestions that court protection would have too big an impact on the economy, with possible loss of overseas construction projects, loss of jobs and widespread insolvency among subcontractors.
We say the company is already in critical condition. It can''t get much worse. Court protection and conversion of loans into capital are aimed at restoring the health of insolvent businesses. The proper application of these measures is the best course. So what is the government afraid of?
We also urge Mr. Chung to make a quick decision. We understand very well both the size of the company and its symbolic meaning to the Hyundai Group. Mr. Chung''s father, Chung Joo-yung, founded Hyundai Construction more than 50 years ago. It became the foundation of Korea''s largest business group. For many years, it was Korea''s cash-box, winning contracts for huge projects in the Middle East. Hyundai Construction is still the country''s largest construction company, with more than $5 billion in revenue last year. Hyundai Construction is the stuff of which legends are made. It has been the pride not only of Hyundai workers, but of the whole nation.
It is quite understandable that Mr. Chung should resist giving up such a company because of a liquidity crisis that may be only temporary. He may still believe he can save the company with a little more cooperation from the government and creditors. But we believe the situation has gone on too long. The power of the invisible hand cannot be ignored any longer. As far as the market is concerned, Mr. Chung has lost his credibility.
It is time for Mr. Chung to realize that "even if the owner goes, the business will stay." It is the least he can do for Hyundai Construction employees, who have been faithful to his leadership and that of his father. Chairman Chung should put the company ahead of himself. He should accept the proposals of the government and creditors.
If he does, he almost certainly will be able to keep his other businesses, such as Hyundai Electronics and Hyundai Merchant Marine. If he persists with his "all or nothing" attitude, he may end up with nothing and cause serious damage to the economy.
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