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Wednesday, 31 May, 2000, 09:26 GMT 10:26 UK
Hyundai founder steps down
Chung Ju-Yung
The founder leaves a company torn by family feuding
The founder of South Korea's largest conglomerate Hyundai has stepped down.

The news cheered the financial markets, and the Korean stock market and Korea's currency, the won, recovered strongly.

Mr Chung Ju-Yung leaves behind him a company in financial trouble, having just negotiated a financial package with its creditors.

He also called for the resignation of his two sons from the management team, but one of them has refused to leave.

The continued squabbles over who will run the company could further dent investor confidence in the group's ability to get itself back on track.

The Korean conglomerates, or chaebols, dominate the country's economy, with their interests spanning everything from motor cars to shipyards.

Since the collapse of Daewoo last year, pressure has increased on these conglomerates to reform, with their inefficiency and nepotism seen as contributing to the country's economic crisis.

Time to go

The 84-year old founder Chung Ju-Yung said in a statement that he and his two sons, group chairman Chung Mong-Hun and Hyundai Motor Chairman Chung Mong-Koo, would resign from management.

The group is to be restructured and run by professional managers. Chung Mong-Hun would take care of the group's economic project in North Korea.

But Chung Mong-Koo has rejected this plan.

"As an expert manager of Hyundai's automaking unit, he will continue devoting himself to leading the company into becoming a global player," a separate statement said.

The resignation squabble is the latest in a long-running family feud.

In March this year, Chung Ju-Yung broke with Korean tradition when he chose not to appoint his eldest son, Chung Mong-Koo as his successor. Instead he appointed Chung Mong-Hun.

At the time the appointment, and the feuding which surrounded it, was thought to hasten the break-up of Hyundai.

Mr Chung founded Hyundai as an auto repair company in 1940.

The company became one of the world's biggest computer chip manufacturer as well as a large scale shipbuilder and automaker.

Creditor talks

The resignations accompanied a financial package.

The conglomerate hopes to raise 5.9 trillion won ($5.2bn) by selling assets, shares and spinning off non-core units.

The number of group affiliates will be cut from 52 to 21.

The restructuring plan follows talks between Hyundai and its main creditor, the Korea Exchange Bank, on how to rescue Hyundai Merchant Marine and Hyundai Engineering and Construction from a liquidity crunch.

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See also:

31 May 00 | Asia-Pacific
Hyundai's maverick founder
27 Mar 00 | Business
Hyundai torn by feud
01 Jul 99 | The Economy
Asia's crisis: The country breakdown
30 May 00 | Business
Crisis engulfs Hyundai
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