Hyundai Elevator to sell 116 billion won Hyundai Movex stake, cancel treasury shares

Hyundai Elevator said on October 16 it will sell 6.5 million shares of its subsidiary Hyundai Movex (현대무벡스), about 5.8% of the company, at 17,810 won per share. Korea Economic Daily and Chosun Ilbo said the price was the October 15 closing price and put the total at 115.765 billion won; other outlets reported about 116 billion won. Hyundai Elevator also decided to cancel 2,487,323 of its own shares, worth about 170 billion won. [ 1 , 2 , 3 , 4 , 5 , 6 ]

The sale lowers Hyundai Elevator's stake in Hyundai Movex from 48.89% to 43.04%; Korea Economic Daily and Chosun Ilbo reported it keeps its position as largest shareholder. The shares are sold in an after-hours block deal combined with a price return swap (PRS) contract that uses the sold shares as the underlying asset. Under the PRS, gains and losses from future share price moves are settled according to the contract: Hyundai Elevator can earn more if the price rises but may bear losses if it falls. The contract runs one year, with early settlement and one-year extensions possible, the two papers reported. [ 1 , 2 , 3 , 4 , 5 ]

Yonhap reported the company said it chose the PRS structure to reduce the burden on ordinary shareholders from a share price fall, and Newsis reported the same. Maeil Business said the company described the block deal as a way to reduce the market impact of large intraday sales. A Hyundai Elevator official told Yonhap the aim was to make non-business assets more efficient, fund shareholder returns and raise corporate value, in line with the shareholder return policy announced in March, which outlets said included a minimum dividend. [ 1 , 2 , 3 , 4 , 5 ]

The treasury shares to be cancelled equal 6.36% of shares issued, and cancellation is scheduled for October 30. Yonhap and Maeil Business reported that 500,000 treasury shares excluded from cancellation will fund employee compensation, partly for 2,671 employees excluding executives under this year's wage agreement and the rest for restricted stock units. Korea Economic Daily and Chosun Ilbo reported a disposal of 144,253 common shares, about 10 billion won, for wage-agreement compensation, while Newsis quoted an official citing 144,307 shares for restricted stock units and similar uses. [ 1 , 2 , 3 , 4 , 5 ]

Seoul Economic Daily described the sale as a further disposal and said the Hyundai Group is using Hyundai Movex as a channel to raise cash after its share price surged with the rise of automation and robotics. It reported that Hyundai Elevator sold 7.8 million Hyundai Movex shares for 76.1 billion won last October, and that Chung Ji-yi (정지이), a Hyundai Movex executive director and daughter of Hyundai Group Chairwoman Hyun Jeong-eun (현정은), sold her entire 4,472,473-share stake, about 4%, between March 18 and April 14 for 124.8 billion won. Hyundai Elevator announced a plan in June to sell 8% of Hyundai Movex but withdrew it after the share price fell sharply, the paper said. [ 6 ]

According to the paper, Hyundai Movex traded below 5,000 won after its 2021 listing and around 4,000 won as late as early last year, then rose more than 10% on August 25 last year, the day after the Yellow Envelope Act passed. It said Chung raised her Hyundai Elevator holding from 137,306 shares to 1,192,990 shares (3.1%) at the end of the second quarter, a stake that will rise to about 3.3% after the cancellation. [ 6 ]