(LEAD) Hyundai cancels corporate overhaul plan on opposition

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SEOUL, May 21 (Yonhap) -- Hyundai Motor Co. on Monday canceled a key spinoff merger plan in a setback to its corporate restructuring amid stepped-up opposition campaigns by some investors.

The decision comes as global hedge fund Elliott and proxy advisers such as ISS continued to take issue with the carmaker's proposed corporate governance overhaul plan, citing that the "unfair" swap ratio of stocks between the two major affiliates will hurt shareholders' value.

"In a new plan, we will fully reflect the views and advice that our shareholders and investors have suggested since the governance restructuring plan was announced (in March). We have realized that there was a lack of communication with our shareholders and the markets (over the plan)," Hyundai Motor Co. Vice Chairman Chung Eui-sun said in a statement.

The company strongly believes that no restructuring of its business or corporate governance can be accomplished without the full trust and support of its shareholders, he said.

The country's biggest automotive group said it will proceed with the corporate restructuring plan again after thoroughly reviewing and supplementing details of the plan.

Under the corporate overhaul plan, the group's auto parts supplier, Hyundai Mobis Co., was slated to spin off its domestic module and after-sales parts businesses and merge them with logistics affiliate Hyundai Glovis Co.

Hyundai Mobis was set to focus on beefing up its core auto parts operations and research and development activities, as well as on developing future growth drivers, such as autonomous vehicles and connected cars, after the streamlining process. The corporate restructuring plan was scheduled to be put to a vote by Mobis and Glovis shareholders on May 29.

But the two companies separately held a board meeting on Monday to cancel the overhaul program, the statement said.

kyongae.choi@yna.co.kr
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