Hyundai write-off hurts clients
Group's 'peace of mind' slogan turns sour as car owners are left stranded, writes DON ROBERTSON
THE Hyundai Motor Group has collapsed in spite of a six-month standstill agreement negotiated with a consortium of local and international banks, which gave Hyundai a cash injection of about R32-million in June and a debt roll-over of 130-million.
"Our success is your peace of mind" was the proud slogan Hyundai used to promote itself in its halcyon days. Now, after the collapse of the Hyundai Motor Group, its 4 000 employees and 80 000 car owners will be wondering who concocted this image.
The final nail in the Hyundai coffin, owned by controversial businessman Billy Rautenbach, was driven home on Wednesday when the Motor Company of Botswana (MCB) and Hyundai Motor Distributors Botswana (HMDB) were put into liquidation.
These two companies make up the vehicle assembly and distribution operations in Botswana and were liquidated following an application by the Botswana Development Corporation, which has a 22.8-million exposure to MCB.
On Friday, the joint liquidators of HMD group said prospective buyers had contacted them and discussions would continue over the next few days.
The saga of Hyundai's collapse began early last year when the First National Bank of Botswana, which has a 8.8-million exposure to HMDB, impounded vehicles at the plant in an effort to protect its investment.
Other creditor banks - including ABN Amro of the Netherlands with a 41.6-million commitment, NV Marubeni Auto of Belgium with a 13.2-million commitment, Banque Belgolaise, also of Belgium, with 15.7-million invested and ING Bank of the Netherlands with 24.9-million on the line - came to the rescue and offered a sixmonth standstill agreement operating from the end of June.
Under this agreement the banks offered a 2-million lifeboat to HMD and ABN Amro offered a second R20-million lifeboat.
The banks have a total exposure of R129.7-million, coupled with 19.6-million from the Hyundai Motor Corporation of Korea and the Botswana Development Corporation's 22.8million.
HMD had undertaken to appoint additional senior management including Reinhard Künstler, former managing director of BMW, and extra financial controllers, as well as providing monthly cash flow statements, profit and loss accounts and balance sheets.
More importantly, Rautenbach was required to inject cash into the operation from funds generated by cobalt producer Gecamines, of which he is chairman.
In December, the Investigating Directorate of Serious Economic Offences won an order to seize records of the holding company, Wheels of Africa, from May 1993 to May 1999 and to raid Rauntenbach's home.
Rautenbach had the order overturned, but on Thursday the unit was granted a new order allowing a search.
When Hyundai entered the local motor industry six years ago, it used a loophole in the local content requirement to import semi-knocked down vehicles into Botswana at 23% import duties and to use the Common Customs Union to reexport them to South Africa with no additional duties.
Local manufacturers had to pay 115% on imported cars. This allowed Hyundai to sell its vehicles at lower prices and with more accessories.
Pressure from producers forced the South African and Botswana government to insist that the company build a fullyfledged R250-million manufacturing facility in Botswana. Vehicle exports are the country's second-largest revenue earner after diamonds.
The liquidation of the two Botswana operations was an obvious follow-up to the liquidation of the SA distribution operation Hyundai Motor Distributors (HMD) on Tuesday, which admitted to liabilities of R8.7-million and assets of R7.6-million and to a loss of R1.3-million in the year to November.
Rautenbach initiated the liquidation of HMD after claiming that poor trading conditions and the negative impact of bad publicity over the company's "financial fragility" had led to the demise of the group.
The Botswana plant also assembled Volvos. The Swedish group, which has a customer base of 10 000 owners, has responded by taking "immediate and extensive measures" to ensure the dealer network receives an uninterrupted supply of vehicles and parts.
Unlike other manufacturers, HMD owns all its 52 dealerships, 14 used car outlets and 34 service centres - and the cost of operating these put additional strains on the business.
All the businesses are now closed and many customers who took cars in for a service before the liquidation announcement have been unable to reclaim them because the premises have been locked up.
The Automobile Association has offered legal advice, for a reduced membership fee, to disgruntled owners in this situation as well as to those who have paid a deposit on a new car, but not yet taken delivery.
HMD is expected to make another announcement tomorrow.