April 25, 2024

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[THE INVESTOR] Hyundai Heavy Industries' stakeholders on Feb. 27 approved the plans to spin off its businesses.

Members of the union, which is staging full strikes for the first time since 1995, had opposed the shareholders meeting, bringing it to a temporary halt within minutes of the 10 a.m. start. 

The company will now spin off three new subsidiaries to specialize in businesses currently conducted by divisions within the shipbuilder.

The spun off companies are tentatively named Hyundai Robotics, Hyundai Construction Equipment and Hyundai Electric and Energy System. Hyundai Robotics will serve as the de facto holding firm for the group.

Trading of HHI shares will be halted from March 30 until May 9. The group plans to list the new subsidiaries in May, and trading of HHI and the new companies will resume on May 10.

The changes will allow HHI to reduce its debt to about 3.9 trillion won (US$3.50 billion), which currently stands at over 7 trillion won, lowing its debt-equity ratio to about 95 percent.

The changes will also see up to 5,000 of HHI’s 23,000-strong workforce being moved to the new subsidiaries.

The move, which the company claims is inevitable for survival, has sparked off speculations that the group’s “owner” Chung Mong-joon is attempting to tighten his grip to lay the grounds for succession by his son.

Chung is HHI’s largest shareholder with 10.15 percent stake and it is widely expected that he will hand over the reins to his eldest son, 34-year-old Chung Ki-sun.

The elder Chung will hold 10.15 percent of HHI, and the three new companies that are scheduled to be set up on April 1.

Hyundai Robotics would hold 13.37 percent of the two new companies, as well as HHI, and 91.1 percent of Hyundai Oilbank. 

Hyundai Mipo will hold 7.98 percent each in HHI, which will take 94.9 percent of Hyundai Samho Heavy Industries’ stake, and the three new subsidiaries.

By Choi He-suk (cheesuk@heraldcorp.com)