Hyundai Group may receive a third request for more details on how it will pay for a controlling stake in South Korea’s largest builder after failing to allay concerns about funding plans.
The group’s second submission was “insufficient,” Korea Exchange Bank, one of the shareholders selling 35 percent of Hyundai Engineering & Construction Co., said in an e-mailed statement today. The sellers will likely give Hyundai Group at least five more days to provide further details, the bank said.
The deal has stumbled as the sellers seek assurances that Hyundai Group hasn’t borrowed money for the acquisition against shares of Hyundai Engineering or group companies. Hyundai Group offered about 5.5 trillion won ($4.8 billion) for the controlling stake, two people familiar with the matter said last month. That’s more than double the market price.
“This deal will probably take a long time to sort out,” said Kang Seung Min, an analyst at NH Investment & Securities Co. in Seoul. “There are too many uncertainties about Hyundai Group’s funding plan.”
Hyundai Merchant Marine Co., Hyundai Group’s biggest unit, climbed 1.5 percent to 45,050 won in Seoul trading, helped by speculation the deal may fall apart, paring borrowing requirements for the shipping line.
Hyundai Engineering climbed 1.4 percent to 66,300 won. The company has a market value of $6.5 billion, according to Bloomberg data. Hyundai Motor Group made a rival offer for the construction company, extending a decade-long family rift.
The shareholders will likely impose the new five-day deadline if Hyundai Group doesn’t submit additional information by tomorrow morning, Korea Exchange Bank said.
The sellers last week requested more details about a 1.2 trillion won loan from Paris-based Natixis SA, after calling a first response “insufficient.” Hyundai Group gave the shareholders documents about the loan on Dec. 3. It didn’t include a copy of the loan agreement.
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