Hyundai Motor has turned down demands by US activist fund Elliott Management for dividends worth 8.3 trillion won (US$7.40 billion) from the carmaker and its affiliate Hyundai Mobis.
On Feb. 26, the Korean automaker said in a regulatory filing that it cannot accept the request, as it would cause a massive cash outflow which will hurt shareholder value. Hyundai Mobis also said it might impede the company’s future competitiveness.
Elliott owns 3 percent stake in Hyundai Motors and 2.5 percent stake in Hyundai Mobis.
From Hyundai Motor alone, Elliott is asking for dividends amounting to 5.8 trillion won, which is around 3.5-fold of the carmaker’s net profit in 2018. Industry watchers say the activist fund may be trying to compensate for the 340 billion won losses it incurred due to a fall in Hyundai Motor’s stock price in April 2018.
Hyundai Motor will hold a shareholders meeting on March 22 to vote on these and other matters including naming Chung Eui-sun, heir apparent of Hyundai Motor Group, as chief executive.
By Kim Hye-soo (email@example.com)