Hyundai to Regroup Under Founder's Brother

Seoul September 25, 2003; Korea Times reports that Hyundai Group is locked again in power struggle between Kim Mun-hee, mother-in-law of late Hyundai Asan chairman Chung Mong-hun, and Chung Sang-yung, a younger brother of late Hyundai founder Chung Ju-yung and honorary chairman of Kumgang Korea Chemical Co. (KCC).

According to a KCC executive yesterday, Sang-yung has become the largest shareholder of Hyundai Group's de facto holding company.

He said that KCC's honorary chairman has taken over a 12.5 percent stake in Hyundai Elevator from Kim in return for lending 29 billion won to Mong-hun before his death. Mong-hun, the fifth son of Hyundai's founder, headed the Hyundai group until he jumped to his death in early August.

As a result, the KCC leader now holds a controlling 16 percent stake in Hyundai Elevator, which emerged as the de facto holding company of Hyundai Group following the younger Chung's suicide.

``There is no problem with KCC honorary chairman exercising his management control over Hyundai Elevator, and he will exercise his rights to reshuffle personnel in the Hyundai Group in the future,'' he said.

But Kim Mun-hee denied KCC's position, saying that Sang-yung was not given the managerial rights when she put up Hyundai Elevator shares as collateral for borrowing from KCC.

Kim Jong-hoon, lawyer for Hyundai Elevator, said that Sang-yung can only claim his rights for assets that he lent to Mong-hun and he cannot exercise any management rights over Hyundai Group with the stake he acquired. He added that Sang-yung needs endorsement from Kim Mun-hee to exercise management rights over Hyundai.

Then KCC took a step back later, the youngest brother of the late Hyundai founder has denied that he is interested in taking over the ailing conglomerate.

``Honorary chairman Chung is only interested in protecting Hyundai group from hostile takeover attempts,'' the KCC executive said, noting that he will exercise rights as the largest shareholder.

The 68-year-old KCC owner has been consulting with other family leaders, including Chung Se-yung, honorary chairman of Hyundai Development, and Hyundai Motor Group chairman Chung Mong-koo to set the future course of the business group.

Hyundai Group, once the country's largest conglomerate, was thrown into disarray after Mong-hun took is own life Aug. 4.

The KCC owner immediately stepped in and began buying large amounts of Hyundai stocks, raising speculation that he may be interested in the management of the ailing group.

KCC, together with eight other Hyundai companies, bought a 16.2 percent stake in Hyundai Elevator for 1.3 billion won ($11.2 million), according to sources.

KCC also bought 3.07 million shares, valued at 14.7 billion won, in Hyundai Merchant Marine, becoming the third-largest shareholder of the nation's largest shipping company with a 2.98 percent stake.