SEOUL, Jan 7, 2011 – Hyundai Motor was selected Friday as preferred bidder to buy a controlling stake in South Korea\’s largest builder, creditors said.
The decision came three days after a court ruled in favour of creditors who have scrapped an earlier deal to sell their stake in Hyundai Engineering and Construction back to Hyundai Group.
Key creditor Korea Exchange Bank said it would seek to clinch a preliminary agreement with Hyundai Motor next week and seal a final contract in February.
The takeover battle is part of a family feud over the former Hyundai empire, which was split into separate units after the death of its billionaire founder Chung Ju-Yung in 2001.
Hyundai Group was in mid-November named preferred bidder for the 34.88 percent stake in the construction firm over Hyundai Motor.
But creditors scrapped the deal last month, saying Hyundai Group failed to give enough information about financing, particularly a 1.2 trillion won ($1.05 billion) loan obtained from French bank Natixis.
The cost has been estimated at 5.51 trillion won.
Hyundai Motor has challenged Hyundai Group to prove it can finance the transaction without jeopardising the rest of its affiliates.
Hyundai Group tried to salvage its bid by disclosing a new two trillion won fundraising plan.
But the Seoul Central District Court on Tuesday rejected Hyundai Group\’s legal attempt to stop the creditors from opening talks with other buyers. Hyundai Group appealed.
Hyundai Motor was hived off almost a decade ago as a separate entity. With affiliate Kia Motors, it is now the world\’s fifth largest carmaker.
The construction firm came under creditor control in a debt-for-equity swap in 2001.
Hyundai Group — which includes a shipping firm, a brokerage, a tour company that operates projects in North Korea and an elevator maker — has rejected suggestions it cannot afford the purchase.
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