The failure of the sale of Hyundai Securities is leading to much more serious repercussions than previously expected. On Oct. 21, the Hyundai Group’s subsidiaries showed a significant fall in stock price, as the failure of the disposal was predicted to have a negative impact on the group’s efforts for financial structure improvement. In addition, it is forecast to have a lingering effect on M&A deals in the securities industry for the time being, too.
That day, Hyundai Merchant Marine lost 5.33 percent in the Korean stock market to reach a level of 6,930 won (US$6.09) per share. Likewise, Hyundai Elevator lost 5.96 percent from the previous session to close at 48,150 won (US$42.36) per share.
The disposal of Hyundai Securities used to be a key part of the Hyundai Group’s plan for improving its financial structure. The failure is predicted to result in problems regarding financing, although the Hyundai Group is maintaining that it can deal with such problems by means of a loan extension by creditor banks such as the Korea Development Bank (KDB), and issuing perpetual bonds by Hyundai Merchant Marine.
Nevertheless, it seems that the Hyundai Group will have to continue considering a variety of variables in making a second attempt to sell the securities firm. It is expected that the resale attempt will be able to be made only after the sale of KDB Daewoo Securities, and uncertainties will keep mounting with regards to the selection of preferred bidders, selling price, and other factors.