Hyundai E&C Falls as Hyundai Group Submits Details on Stake Purchase Plan

Hyundai Engineering & Construction Co. fell the most in almost two weeks in Seoul after Hyundai Group gave shareholders documents supporting its funding plan for buying a stake in the builder, damping speculation the deal may fall apart.

South Korea’s biggest construction company fell 2.7 percent, the biggest decline since Nov. 22, to 65,400 won at the 3 p.m. close of trading in Seoul. Hyundai Merchant Marine Co., Hyundai Group’s largest unit, dropped 2.8 percent to 44,400 won.

Hyundai Group said today it gave shareholders selling 35 percent of the builder information showing that it didn’t use shares of the construction company or other units as collateral for a loan. The documents may ease the sellers’ concerns about Hyundai Group’s ability to pay for the deal even as the builders’ other shareholders worry about how much extra money the group will be able to invest in the company following a deal, said Kang Seung Min, an analyst at NH Investment & Securities Co.

“Investors still have doubts about how Hyundai Group will repay debts used to buy the builder without hurting the financial health of its units or Hyundai Engineering,” the Seoul-based analyst said. The documents today “strengthen speculation that the deal may go through,” he said.

Loan Agreement

Hyundai Group said it didn’t include a copy of the 1.2 trillion won ($1 billion) loan agreement with Paris-based Natixis SA in the documents it handed over. The shareholders will review the submission before deciding what steps to take next, said Korea Exchange Bank, one of the sellers.

Hyundai Group offered about 5.5 trillion won for the controlling stake in the builder, two people familiar with the matter said on Nov. 16, the day the group was name preferred bidder. That’s more than double the market price.

The bid was about 400 billion won higher than an offer made by Hyundai Motor Group, said the people. Hyundai Motor Group and Hyundai Group, once part of the same business group, made rival offers for the builder, extending a decade-long family feud.

The shareholders selling the stock said on Dec. 1 that Hyundai Group had until Dec. 7 to submit information about the loan agreement and other information showing how it will pay for the stake in the builder.

To contact the reporters on this story: Sookyung Seo in Seoul at sseo10@bloomberg.net; Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.

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