The second round of legal battles between Hyundai Elevator, the nation’s leading elevator manufacturer, and Schindler Group, its No. 2 shareholder, is set to begin following Schindler’s appeal on a local court’s ruling that rejected its request to stop a planned capital increase in June.

The rationale behind the Germany and Switzerland-based elevator and escalator maker is that the 110.9 billion-won worth of capital increase would lead to an up to 25 percent discount of stock value.

Schindler also appeared to be watchful of Hyundai Group’s intentions to protect managerial rights over Hyundai Merchant Marine, the group’s de facto holding company.

Hyundai Elevator is the largest shareholder of Hyundai Merchant with a 25 percent stake. Hyundai Group, in turn, is the controlling stakeholder in Hyundai Elevator with a 45 percent stake.

Schindler has already made it clear that if the opportunity arises, it would seek an M&A with Hyundai Elevator.

Alfred Schindler, the chairman of Schindler Holding said in a recently interview with the local media that while it is not eying a hostile M&A, the option is on the table.

Hyundai bristled at the report.

“We feel that we need to know what the real intent is,” said one Hyundai Elevator official. “Schindler claims it’s not after an M&A and wants to enhance shareholder value, but what we see is different,” hinting that the elevator company feels Schindler has more up its sleeve.

She stressed that if an M&A is what Schindler has in mind, Hyundai has every intention to curb Schindler, saying that it wants to keep Hyundai Elevator a Korean firm.

The other top two elevator makers here ― Otis and ThyssenKrupp ― are the products of foreign takeovers.

Part of the reason that Hyundai Elevator questions Schindler’s intentions is because it recently blocked a viable new business for Hyundai Elevator during a shareholder’s vote.

The new business involved bus stops, and would have allowed Hyundai Elevator to operate alongside KT and Seoul City.

Schindler, however, claims that it is only about protecting value, and that Hyundai Elevator is “losing value,” and has been destroying value for the past three years.

“As a shareholder, we have to defend our investment,” Schindler said.

One big problem is the lack of communication between Hyundai Elevator and Schindler, allegations to which both sides admit.

Each side is playing a game of “he said, she said,” with no official communication channels.

Schindler, for its part, chooses to communicate solely via its legal representative, Kim & Chang, the largest law firm in Korea.

In 2006, Schindler Holdings took up the second largest share in Hyundai Elevator from KCC. Through capital increases and stock acquisitions, Schindler now holds a 35 percent stake in the Hyundai affiliate.

For two years following the stake acquisition, Hyundai Elevator recorded a net profit, but the figures plunged into the red in 2009, and again in 2011 and 2012.

By Kim Ji-hyun  (jemmie@heraldcorp.com)