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Hyundai Heavy Ind Group to list Oilbank, issue US$1.2b rights shares
[SEOUL] South Korea's Hyundai Heavy Industries Group plans to list its refining arm Hyundai Oilbank in an IPO in 2018 and raise about US$1.2 billion via a share issue by shipbuilder Hyundai Heavy Industries, in a move to bolster its finances.
Hyundai Heavy Industries, the flagship company of South Korea's ninth-largest conglomerate, said on Tuesday that Hyundai Robotics, the group's holding company, has decided to list refining subsidiary Hyundai Oilbank in an initial public offering (IPO) in the second half of 2018.
The shipbuilder also said it will issue rights shares worth about 1.3 trillion won (US$1.21 billion). The two moves are part of the conglomerate's efforts to improve affiliates' financial soundness after switching to a holding company structure earlier this year, it said.
Hyundai Oilbank, South Korea's smallest refiner by capacity, is 91.1 percent owned by Hyundai Robotics.
"Starting with Hyundai Oilbank's initial public offering, we will continue to strengthen the transparency of our ownership structure," a Hyundai Heavy Industries Group official said, according to a statement by the shipbuilder.
Hyundai Heavy Industries, the world's second-largest shipbuilder by order book, said the rights issue is expected to be completed by March 2018 and the sum raised will be used to improve its financial structure and for research & development.
The IPO and the rights issue will prepare the group for a shipbuilding industry recovery expected to start in 2019, it said.
A Hyundai Heavy spokesman said the rights issue is part of the shipbuilder's previously announced plan to improve financial soundness. That plan began in 2015 when major South Korean shipbuilders reported losses as low oil prices drove an industry downturn, and cost overruns and delays in the construction of complex offshore facilities weighed.