Kia Motors to Reduce Capital, Pave Way for Hyundai Control

South Korea's financially struggling Kia Motors Corporation will reduce its capital by 90% and then increase it by 3,863% next year, setting the stage for the Hyundai Group to acquire a controlling 51% stake. The capital reduction will be achieved through a 10-to-1 share consolidation, reducing the number of shares from 75.06 million to 300 million. The capital increase will be facilitated through a combination of investments from Hyundai-affiliated companies, creditor banks, and existing shareholders.

Key Takeaways:

• Kia Motors' capital will be reduced by 90% from 37.8 billion won to 3.9 billion won.
• The capital increase will increase the capital to 1.5 trillion won, a 3,863% increase.
• The Hyundai Group will acquire a 51% stake in Kia Motors through a consortium of five Hyundai-affiliated companies, creditor banks, and existing shareholders.
• 153 million shares will be bought by the Hyundai consortium at 5,500 won per share.
• Creditor banks will convert 120 million shares into a 40% stake at 15,000 won per share.
• Existing shareholders and employees will receive 1.916 million shares each at 5,000 won per share.
• Ford Motor sold its 6.84 million shares, representing 9.04% of the capital, to J.P. Morgan through block trading.

Statistics:

• Kia Motors' capital reduction: 90% (37.8 billion won to 3.9 billion won)
• Capital increase: 3,863% (1.5 trillion won)
• Number of shares before consolidation: 75.06 million
• Number of shares after consolidation: 300 million
• Number of shares bought by Hyundai consortium: 153 million
• Price per share for Hyderabad consortium: 5,500 won
• Price per share for creditor banks: 15,000 won
• Number of shares received by existing shareholders and employees: 9.72 million
• Price per share for existing shareholders and employees: 5,000 won
• Timeframe for capital increase: February 1, 1999

Sources:

• (Yonhap)
• COMTEX (http://www.comtexnews.com)