Hyundai Group chief to compensate plaintiffs with Hyundai Movex shares

Hyundai Elevator Co. headquarters and Hyundai Group’s Chairwoman Hyun Jeong-eun [Courtesy of Hyundai]

Hyundai Group’s Chairwoman Hyun Jeong-eun will use shares she owns in Hyundai Movex Co. after losing a lawsuit filed by Schindler Holdings AG, a multinational elevator company, and some minority shareholders seeking compensations for losses caused at a unit of the South Korean conglomerate.

Earlier, South Korea’s Supreme Court upheld a lower court ruling in favor of plaintiffs for financial damages claimed by Schindler and some minority shareholders against Hyun and former Hyundai Elevator Co. Chief Executive Officer Han Sang-ho. An appeal court had ruled that Hyun should pay 170 billion won ($130 million) to Hyundai Elevator.

The lawsuit began when the Swiss elevator manufacturer claimed that Hyundai Group caused hundreds of billions of won in losses to Hyundai Elevator due to derivative contracts signed by Hyun.

On Thursday, Hyundai Elevator held a board meeting and decided that Hyun would use 24.75 million Hyundai Movex shares she owns to compensate for the damages and late interest payment. The company also plans to recover the 20 billion won security deposit that Hyun had pledged to the court.

But it seems difficult for Hyundai Elevator to receive the full compensation, including interest, through her Hyundai Movex shares and security deposit alone. The lawsuit lasted for nine years, and interest continued to accumulate. There are predictions that the compensation amount may exceed 200 billion won, which has led to speculation that Hyundai Elevator may increase dividends to Hyun or she may need to borrow more loans using her shareholdings.

Hyun owns a 7.83 percent stake in Hyundai Elevator, of which 7.22 percent is held as collateral by financial institutions. If Hyun uses her Hyundai Movex shares to compensate for some of the damages, Hyundai Elevator’s stake in Hyundai Movex will increase to 53.13 percent.