[Photo provided by Hyundai Steel Co.]
NH Investment & Securities Co. wants to shed 4 million shares in Hyundai Steel Co. in a block deal at a time when the stock is on an upward trend on expectations of revived inter-Korean ventures.
According to industry sources on Thursday, NH Investment has set out to sell its 2.99 percent stake in Hyundai Steel. Depending on demand, the shares would be offered from 59,900 won and 62,900 won apiece, 2.93-7.56 percent off from Hyundai Steel’s Thursday closing price of 64,800 won. At best, the company could fetch as much as 251.6 billion won ($234.8 million). The sale is led by NH Investment and JP Morgan.
In January 2016, a total of 8.8 million shares of Hyundai Steel tantamount to a 6.6 percent stake came under NH Investment through a total return swap (TRS) agreement with Hyundai Motor Group, which was required to reduce its increased stakes in the steelmaker under the antitrust rule on cross-affiliate holding in large conglomerates.
Stakes in the steel plate supplier by Hyundai Motor Co. and Kia Motors Corp. had increased as the result of Hyundai Steel`s merger with its sister company Hyundai Hysco Co.
Under the three-year TRS contract, Hyundai Steel shares were placed with NH Investment at 47,750 won per share or 443.9 billion won in total. The arrangement allowed Hyundai Motor to enjoy all the capital gains of the steelmaker without actually owning it. In exchange, NH received fixed interest payments from Hyundai Motor plus the coverage of any depreciation in the asset.
Hyundai Steel shares have jumped more than 15 percent since the historic inter-Korean summit meeting on April 27, after the leaders of the two Koreas vowed for greater economic cooperation, including rebuilding cross-border roads and railways.
At the current price, each share of Hyundai Steel can generate a profit of 15,150 won to deliver as much as 60.6 billion won.
Shares of Hyundai Steel fell 6.17 percent to close Friday at 60,800 won.
By Han Woo-ram and Kim Hyo-jin
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]