Chaebols, or family-owned conglomerates, have long dominated Korea's economy, but have come under fire as a result of the economic crisis that began in 1997. Hyundai, whose total assets of 88.8 trillion won ($ 74 billion) are larger than Malaysia's 1998 gross domestic product of $ 73.35 billion, said it would transform itself into companies focusing on electronics, cars, heavy industry and construction. "In reality, Hyundai group would completely be dismantled, Park Se-Yong, chairman of Hyundai's corporate restructuring committee, said at a news conference. Hyundai would advance the planned separation of its auto division from the group by one year to 2000 and the other four divisions to 2003 from the earlier announced 2005. "The smaller groups will be run independently with only corecompanies staying and the rest (of the group's subsidiaries) being eliminated," he said. Analysts said the five companies would likely be headed by sons and other relatives of Hyundai group founder and patriarch, 83-year-old Chung Ju-yung.

Hyundai's announcement comes on the heels of strong government pressure on the top five Chaebols to pursue restructuring more aggressively. Government officials from President Kim Dae-jung in recent days warned recalcitrant Cheobal that their creditors, most of whom are state controlled banks, could start cutting off credit lines. Hyundai said it would slash its debts by 33.9 trillion won ($ 28.3 billion) to 45.4 trillion by the end of this year.

"Hyundai will cut 14.3 trillion won in debts through sales of affiliates, joint ventures and spin offs," Park said. "It will reduce a further 19.7 trillion won in debts through mergers, asset sales, rights issues and inducing foreign capital." The efforts would lower Hyundai's debt-to-equity ratio to 199 per cent by the end of1999, against a revised debt ratio o 449 per cent at the end of last year.

Hyundai said it would also reduce the number of its affiliates to 26 from the current 79 by the end of this year through mergers, sales, spin-offs and closures, he said. The 79 includes affiliates of Kia group whose automotive companies were taken over recently by Hyundai. The reduction would consist of 13 spin-offs, 15 mergers, 13 sales and four closures. Eight Kia affiliates would also be merged or sold, Park said. Eighteen affiliates have already been closed, merged or spun off as of April 1999, he said. Regarding its heavy industry sector, Park said Hyundai would give up chemicals and focus on heavy industries.

Hyundai buys Semicon for $ 2.15 bn
Seoul: South Korea's Hyundai Group on Friday agreed to pay 2.56 trillion won ($ 2.15 billion) to acquire LG Semicon Co from the LG Group, in a deal that creates the world's second largest memory chip producer. Ending months of haggling over a government-guided restructuringdeal, LG agreed to hand over 91.22 million shares in LG Semicon held by its affiliate companies to Hyundai Electronics for 2.56 trillion won, a joint statement from the two groups said. Hyundai would pay 1.56 trillion won to LG on a date agreed to by both groups. The remaining one trillion won will be paid in five equal installments by 2002, the statement said. Part of the payment will be made with securities held by Hyundai. An LG spokeswoman earlier told Reuters the initial 1.56 trillion included Hyundai's holdings in telecommunications firm Dacom Corp.

A Hyundai official said the remaining one trillion won would be paid every six months starting from June 2000. All procedures relating to the handover of LG Semicon stakes to Hyundai would be completed by June 30, the joint statement said. ``This means that the initial payment of 1.56 trillion won and the handover of all the shares would be complete by June 30,'' another Hyundai official said. LG agreed in January to sell LG Semicon to Hyundai as part of agovernment-led restructuring effort to slim down over-capacity in several industrial sectors, including the key semiconductor industry. But concluding the deal proved to be difficult, as the two sides haggled over the price of LG's chip unit.