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'Hyundai Family Helping Each Other': Controversy Over KCC Glass’s 47 Billion Won Purchase of HN Group’s Jangchung-dong Headquarters

[비즈한국] It has been confirmed through Bizhankook's reporting that KCC Glass344820, led by second-generation Hyundai family member Chairman Chung Mong-ik, purchased the Jangchung-dong headquarters of HN INC for 47 billion won. The largest shareholder of HN INC is Chung Dae-sun, a third-generation Hyundai family member and the first cousin once removed (five-degree relative) of Chairman Chung Mong-ik. President Chung is also famous as the husband of former announcer Roh Hyun-jung. Because the timing of the transaction occurred just before HN INC filed for corporate rehabilitation with the Seoul Rehabilitation Court, critics suggest that Chairman Chung Mong-ik may have used company funds to help his cousin. KCC Glass stated that it was a "preemptive investment."

It has been confirmed that KCC Glass, led by Chairman Chung Mong-ik, purchased a stake in Adora Tower (72 officetels) held by HN INC for 46.707 billion won on March 2 of last year. On the same day, KCC Glass also purchased a stake in Adora Tower (1 officetel) held by BSP Asset, a subsidiary of HN INC, for 383.5 million won. The sales contract was signed on December 12, 2022, and ownership was transferred to KCC Glass upon final payment on March 2, 2023. The largest shareholder of HN INC is President Chung Dae-sun, who holds an 81% stake (5,303,344 shares). In effect, Chairman Chung Mong-ik purchased the officetels of his cousin, President Chung Dae-sun, for 47.0905 billion won.

Chairman Chung Mong-ik is the second son of the late KCC Honorary Chairman Chung Sang-young, who was the youngest brother of the late Hyundai Group founder Honorary Chairman Chung Ju-yung. President Chung Dae-sun is the third son of the late Chung Mong-woo, former president of Hyundai Aluminum and the fourth son of the late Honorary Chairman Chung Ju-yung. The two are cousins once removed (five-degree relatives).

The timing of the transaction is also suspicious. HN INC filed for corporate rehabilitation with the Seoul Rehabilitation Court on March 21, 2023, due to liquidity issues stemming from the real estate PF crisis, having sold the building to KCC Glass just before doing so. This raises suspicions that Chairman Chung Mong-ik misappropriated company funds to assist his cousin. Around the same time, it was reported that Chung Mong-joon, second-generation Hyundai family member and chairman of the Asan Foundation (major shareholder of HD Hyundai), also provided 10 billion won of his own money to help his cousin, President Chung Dae-sun.

A local real estate official commented, "As of August 1, all HN Group affiliates moved their offices elsewhere. Since it hasn't been decided whether KCC Glass will move in, Adora Tower's vacancy rate is expected to remain in the 90% range for a while." They added, "It's puzzling that KCC Glass bought the officetel stake, given that the building has long had a high vacancy rate. I suspect Chairman Chung Mong-ik helped his nephew, President Chung Dae-sun, who lost his father early, out of a sense of family duty."

Regarding this, KCC Glass explained, "We purchased the Adora Tower stake for the purpose of a preemptive investment to establish a sales and business base in Jung-gu, Seoul. We have left Adora Tower empty for now due to various circumstances, including existing leasing contracts, but we plan to use it for HomeCC Interior showrooms and business offices in the future." They added, "It is unrelated to Chairman Chung Mong-ik, and because the transaction price did not meet the disclosure threshold, it was not publicly announced."

HN INC, where President Chung Dae-sun is the largest shareholder, is a mid-sized construction company with brands like 'Sun & Vill' and 'Herriot.' The company's entry into rehabilitation proceedings is attributed to the refusal of move-ins at the 428-unit residential complex Dongtan Station Herriot and the failure to sell units at the 214-unit terrace house 'Sokcho Herriot THE 228.' Last December, SM Group acquired HN INC via a stalking horse bid, and the Seoul Administrative Court decided to terminate the rehabilitation proceedings on May 10.