Schindler Holding AG (SCHP), the Swiss elevator maker, is weighing a sale of it’s stake in Hyundai Elevator Co. (017800) to prevent its investment from being diluted by future share sales, Chairman Alfred Schindler said.
Schindler, which had pledged to buy the elevator unit a decade ago, will own 21.5 percent after the Korean company completes a share sale at the end of February, down from 35 percent last year, Chairman Alfred Schindler said on a conference call today.
“We have a very good board: some are for selling, others say let’s wait for a potential recovery,” said Schindler. Board members including ABB Ltd. Chairman Hubertus von Gruenberg and Charles Powell, an adviser to former British Prime Minister Margaret Thatcher, will have a “better vision” after Hyundai reports full-year results, he said.
The Korean elevator-maker is a part of a web of cross-shareholdings linking Hyundai Group’s various businesses. South Korea’s so-called chaebols often control units through interlocking stakes. Hyundai Group, headed by Chairwoman Hyun Jeong Eun, is separate from Hyundai Motor Group, which is run by Chung Mong Koo, the elder brother of Hyun’s late husband.
“If we don’t sell, I don’t see with the liquidity crisis how they can avoid capital increases,” Schindler said, adding that the board may still decide to keep the stake as selling would make Hyundai Elevator’s shares drop and trigger an impairment.
Schindler, a billionaire through his stake in his family company, said it’s a “sad story,” which could result in a total writedown of the company’s almost $400 million investment in the business. Schindler is attempting to end Hyundai Elevator share sales, which it says are motivated by the need to fund other units within the Hyundai Group, the majority shareholder.
Successive share sales have diluted Schindler’s stake, resulting in two charges totaling 219 million Swiss francs ($242.8 million) booked in 2013. Schindler may announce a third impairment if Hyundai’s share keeps dropping, the chairman said. The book value of Schindler’s stake is $150 million and Alfred Schindler said he expects to lose another $100 million through capital increases.
One motivation for not selling shares now is it would hurt minority shareholders such as Hyundai Elevator employees as the share price dropped, the chairman said. There are other “deals to be had” in Asia and a sale would hurt the Swiss company’s image, he said.
“I am a businessman and I have a reputation. There are sellers of businesses out there,” he said. “If you behave like a shark, then you are treated like a shark. That means nobody likes you.”
To contact the reporter on this story: Patrick Winters in Zurich at email@example.com
To contact the editor responsible for this story: Simon Thiel at firstname.lastname@example.org