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US hedge fund stays calm ahead of shareholders’ meetings

Elliott Management has pressed Hyundai Motor and its affiliate Hyundai Mobis to pay $6.3 billion in payments and appoint five outside directors nominated by the U.S. hedge fund.

Ahead of the March 22 shareholders’ meetings for the two Hyundai companies, the New York-based fund came up with six press releases between February 27 and March 13. The number was just five throughout 2008.

After that, however, the $35 billion activist fund has not done anything notable even though the D-day is just a few days away. A spokesperson for Elliott said that it has no plan to issue a press release before the meetings.

Observers point out that the activist fund headed by billionaire investor Paul Singer might be crestfallen after shareholder advisory companies presented reports, which supported Hyundai.

Against the requests of the huge one-off dividends, Hyundai has stuck to its initial plan of paying less than $1 billion in combined dividends.

Glass Lewis, a top-tier proxy advisory company, mostly backed Hyundai. Business leader International Shareholder Services recommended against the large-sized dividend plan proposed by Elliott. They endorsed some of Elliott-suggested directors, though.

Besides, five foreign pension funds sided with Hyundai Motor in dividends payment against Elliott, which holds a 2.9 percent stake in Hyundai Motor and 2.6 percent in Hyundai Mobis.

According to the Korea Corporate Governance Service, the five are CalPERS, CalsTRS, SBA of Florida, CPPIB and OTPP.

Ready to accept defeat?

Prof. Kim Pil-soo said that Elliott might lose its hope of winning at the proxy war.

Elliott appears to be ready to accept the defeat at the proxy standoff this time. But it would come back to challenge Hyundai management any time. Let’s see how it would respond after the shareholders’ meetings,” he said.

Last year, the fund said that it channeled some $1 billion to buy Hyundai shares. Hyundai Motor is Korea’s top automaker, and its subsidiary Hyundai Mobis is the nation’s biggest auto parts supplier.

 

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