Hyundai Motor Group signed a memorandum of understanding with creditors of Hyundai Engineering and Construction to take over the nation’s largest builder Friday.
The MOU between the creditors, including Korea Exchange Bank, and the automobile giant is said to carry all the conditions found in that with Hyundai Group, which has been deprived of preferred bidder status due to its dubious funding plan.
The preliminary contract is also reported to contain clauses enabling the builder’s creditors to request information regarding the source of Hyundai Motor’s funds for the deal.
The new preferred bidder will carry out due diligence on Hyundai E&C for four weeks beginning next week and the final share purchase agreement will be signed mid February.
Hyundai Motor will then be required to make the payment in full in order to conclude the acquisition. The group is reported to have bid about 5.1 trillion won ($4.57 billion) for the construction company.
The final amount, however, could vary within 3 percent of the bidding price depending on the results of the due diligence.
Following completions, Hyundai Motor Group will acquire 34.88 percent, or a little less than 39 million shares, of Hyundai E&C.
The process of finding a new majority shareholder for the country’s largest builder has taken a long detour with Hyundai Group deprived of preferred bidder status due to ambiguities about the source of a part of its funds.
In November, Hyundai Group was chosen over Hyundai Motor Group to acquire Hyundai E&C with a bid of about 5.5 trillion won.
Hyundai Group’s selection led to a series of complaints from the builder’s creditors, and from Hyundai Motor, with the two conglomerates taking legal action against each other on a number of charges including defamation.
Hyundai Group’s preferred bidder status was ultimately revoked on Dec. 20 with Hyundai E&C’s creditors citing suspicions about a 1.2 trillion won loan obtained from the Paris-based Natixis Bank by its subsidiary Hyundai Merchant Marine’s French operations.
