Hyundai to spin off motor division

The Hyundai Group, which previously showed little willingness to resolve its financial crisis, seems to finally be headed in the right direction.

Hyundai has offered to provide a two-stage rehabilitation blueprint that will include a self-normalization plan for Hyundai Construction if creditor banks accept the group`s separation proposal. Creditors and the government seem to be willing to embrace Hyundai`s offer. This bodes well for the resolution of the crisis, as Hyundai`s management rights dispute and resistance to spinning off its affiliates, which caused it to lose credibility, will soon be rectified.

There appear to be several motives behind Hyundai`s decision to come out with an affiliate separation plan early on. Firstly, it was a earnest effort to answer President Kim Dae-Jung`s call for the Hyundai crisis to be resolved by the end of this week.

Also, Hyundai has revealed that the government`s new economic team is one it can talk to. In conclusion, it seems Hyundai can find no advantage to confronting the more flexible economic team and realizes that, in the worst case scenario, the government may give up on saving it. A Hyundai official`s comment that if a comprehensive solution to the crisis cannot be provided a step by step approach should be taken supports the group`s new position. There are also indications that the proposal was made to mitigate the severe cash crunch being experienced by Hyundai Construction.