With respect to the public announcement by Hyundai Heavy Industry Co., Ltd. (“HHI”) relating to its purchase of 13,000,000 shares (“Shares”) of Hyundai Investment Trust Co., Ltd. (“HITC”) from Canadian Imperial Bank of Commerce (“CIBC”), we would like to clarify the factual background and history of our original sale of the Shares to CIBC in order to eliminate any misunderstandings about this situation. Our sale of the Shares to CIBC was a straight-forward sale-and-purchase transaction. In March 1997, we acquired 52.56% of HITC’s issued shares as part of Hyundai Group’s acquisition of HITC. Because we were then subject to investment limitations under the Monopoly Regulation and Fair Trade Act and also because we believed that our equity ownership in HITC was too high, we decided to sell part of our holding in HITC to CIBC. At that time, even though CIBC expected huge capital gains from the Shares once HITC’s operations were stabilized, it nonetheless demanded a put option as an assurance to cover its down-side risk. We had no intention, however, to repurchase the Shares, and further, it was impossible to accept the put option due to Korean regulatory restrictions. Accordingly, on June 4th, 1997, CIBC and we executed a share purchase agreement for the Shares that did not provide for a put option. Thereafter, CIBC negotiated with HHI and executed a share option agreement on July 23, 1997 pursuant to which HHI granted a put option to CIBC for the Shares. In our understanding, HHI expected the operations of HITC to stabilize shortly, and thus, it believed that the possibility of CIBC’s exercising the put option was remote. Further, HHI became the counter party to the put option because the Hyundai Group tried to spread ownership of HITC among several Hyundai Group companies, in the event that the option should be exercised. At that time, we and Hyundai Securities Co., Ltd. (“HSC”) submitted a letter of undertaking to HHI to the effect that we and HSC would cause HHI not to be burdened with the obligation of the put option. Since we attained certain capital gains from the sale of the Shares to CIBC, as a matter of fairness, we agreed to share part of any loss that HHI might incur from the put option. In addition, we also had certain assurances from other parties that any such loss shared by us would be recompensated. In light of the foregoing, it cannot be said that our sale of the Shares to CIBC is a type of financing transaction and HHI’s provision of the put option is a type of payment guarantee for the transaction, as alleged by HHI. Our legal counsel is currently reviewing and analyzing our potential liabilities, if any, and the countermeasures available to us, in this matter. We will decide our detailed action plan based on the result of our legal counsel’s analysis, and we will make every effort to protect the interests of our shareholders by exhausting all the options available to us, while we will try to resolve this matter amicably with HHI and HSC. It is clear, however, that we are not obligated to repurchase the Shares from CIBC. We would like to reiterate our commitment and promise not to increase our holdings and exposure in HITC. D.K. Chang Executive Vice President Hyundai Electronics Industries Co., Ltd.
– With respect to the public announcement by Hyundai Heavy Industry Co., Ltd. (“HHI”) relating to its purchase of 13,000,000 shares (“Shares”) of Hyundai Investment Trust Co., Ltd. (“HITC”) from Canadian Imperial Bank of Commerce (“CIBC”), we would like to clarify the factual background and history of our original sale of the Shares to CIBC in order to eliminate any misunderstandings about this situation.
