SEOUL, March 29 (Korea Bizwire) – Moody’s Investors Service said Thursday that Hyundai Steel Co.’s plan to sell its 5.7 percent stake in auto parts maker Hyundai Mobis Co. is credit positive for the steelmaker.
But the planned stake sale will not have an immediate impact on Hyundai Steel’s Baa2 stable rating, the global ratings agency said in a statement.
“The share sale if it goes ahead as planned will generate after-tax cash proceeds of around 800 billion won (US$750 million) for Hyundai Steel, which it can use to reduce debt and increase its financial buffer,” Moody’s analyst Sean Hwang said in the statement.
On Wednesday, Hyundai Steel said it plans to sell its stake in Hyundai Mobis to Hyundai Motor Group Chairman Chung Mong-koo and the group’s Vice Chairman Chung Eui-sun.
The transaction will take place within two months after Hyundai Mobis completes its proposed spin-off of some divisions, which is scheduled to occur by July, the statement said.
If the proceeds are mostly spent on debt reduction, it will improve the company’s financial status over the next 12 months, it said.