South Korea’s leading auto maker Hyundai Motor Co. will offload its 5 percent stake in Korea Aerospace Industries Ltd. (KAI) through an after-hour block trade and it is expected to use fund to ease the financial burden after Hyundai Motor Group’s purchase of the land for its new headquarters.
According to investment bank industry sources on Wednesday, Hyundai Motor has decided to put 4,873,756 KAI shares, a half of 9,747,511 shares or a 10 percent stake in KAI that it owns, on sale in an after-hour block trade. Bank of America Merrill Lynch is picked as the main underwriter for the deal, and sale price is set between 70,000 won and 71,500 won per share, 3.4 to 5.4 percent discount from Wednesday’s closing price of 74,000 won. If all shares are fully subscribed, Hyundai Motor will likely secure as much as 348.5 billion won ($297 million). The auto maker is likely to put the rest of its KAI shares on sale within this year, according to the industry watchers.
Hyundai Motor is expected to use capital raised from the sell-off of its KAI shares to lessen the financial burden after Hyundai Motor Group acquired the land for its new headquarters in the heart of Seoul’s posh Gangnam district at 10.55 trillion won from Korea Electric Power Corp. The company is said to have made strenuous efforts to minimize the financial loads after the purchase. The car company is known to have prepared sell-off of its KAI stakes since the beginning of this year when Hanwha Techwin Co. and DIP Holdings Co. unloaded their KAI shares. Hanwha Techwin secured about 280.0 billion won earlier this year by selling its 4 percent stake in KAI in a block trade, and DIP Holdings raised 305.0 billion won by offloading all its KAI shares.
KAI shares fell 3.5% to end at 71,400 won in Seoul trading on Thursday while Hyundai Motor closed unchanged at 146,500 won.
By Kang Doo-soon and Kim Jung-hwan
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