Hyundai Heavy Industries Plans to Boost Finances

Hyundai Heavy Industries plans to list its refining subsidiary Hyundai Oilbank in an IPO to raise about $1.2. The group also plans to issue 12.5 million rights shares, worth about $1.21 billion, by March. 

The two moves are designed to boost finances after switching to a holding company structure earlier this year. The group's holding company is Hyundai Robotics which has a 91.1 percent stake in Hyundai Oilbank. Hyundai Robotics has 27.8 percent interest in Hyundai Heavy Industries, which holds an 80.5 percent stake in Hyundai Samho Heavy Industries. Hyundai Samho Heavy has a 42.3 percent share in Hyundai Mipo Dockyard, which holds a 4.8 percent share in Hyundai Heavy Industries.

“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.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, and earlier in the year, Hyundai Heavy Industries divested non-core businesses and split into four independent entities: shipbuilding, electronics, construction equipment and robotics.

Currently, Hyundai Heavy Industries, the world’s second-largest shipbuilder by order book. The IPO and the rights issue will prepare the group for a shipbuilding industry recovery expected to start in 2019, it said.

This week, Northern Drilling said it will exercise its option to purchase the sophisticated semi-submersible rig, the Bollsta Dolphin, being built by Hyundai Heavy Industries for US$400 million. The rig is capable of operating in harsh environments and in deep waters of up to 10,000 feet. It is currently under construction and expected to be delivered in January 2019.

Northern Drilling said it will make a pre-delivery installment of $200 million with the remaining balance due on delivery. The contract with the rig's original purchaser was terminated in 2015.