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Shipbuilder will buy Hyundai Oilbank from IPIC at 25% under market value
November 16, 2009
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| Hyundai Heavy Industries, the world’s leading shipbuilder, is looking to regain its position as the largest shareholder of Hyundai Oilbank for the first time in 10 years. The company now has the right to purchase the 70 percent stake in Hyundai Oilbank held by the Abu Dhabi-based state-run International Petroleum Investment Co. at 15,000 won ($12.97) per share, after the International Court of Arbitration of the International Chamber of Commerce ruled in favor of the shipbuilder Friday. The ICA concluded that IPIC violated a contract it made with Hyundai Heavy Industries in 2003, and ordered IPIC to sell its shares in Hyundai Oilbank back to the Korean firm at 25 percent under market value. Hyundai Heavy Industries will buy 171.5 million shares in the refinery for a total of 2.57 trillion won. “We have prepared 2 trillion won to buy the stakes, so there is no problem,” said a Hyundai Heavy Industries official who declined to be named. In 1999, after the Asian financial crisis, IPIC bought 50 percent of Hyundai Oilbank previously held by Hyundai Heavy Industries. In 2003 it then secured the right to buy the remaining 20-percent stake the Korean shipbuilder had in the oil company, a purchase it carried out in 2006. But then in 2007 IPIC tried to sell its shares to a third party as the financial situation at Hyundai Oilbank worsened. Hyundai Heavy then filed the suit against IPIC for violating its purchase agreement, in which it promised to give Hyundai and its affiliates a chance to buy the shares before selling them to another company. The shipbuilder has recently been actively expanding to diversify its business. Last year it bought CJ Investment and Securities, now known as Hi Investment and Securities. It has also been selected as a preferred bidder for Hyundai Corp. “[Hyundai Heavy] will keep its top position in the global shipbuilding market, but it cannot rely entirely on shipbuilding, and therefore it is at a point where growing and improving its competitiveness through various means is necessary,” said Song Jae-hak at Woori Investment Securities. The final contract for the Hyundai Corp. acquisition is expected to be signed by the end of this month. As of the third quarter Hyundai Heavy Industries had around 800 billion won in liquid assets, a sharp drop from last year’s 2.5 trillion won. But it isn’t worried about the acquisitions. “Although we cannot disclose how we will get the necessary capital, preparations have been made to buy the companies,” said the Hyundai Heavy official. By Moon Byung-joo, Yum Tae-jung [ojlee82@joongang.co.kr] |
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