Hyundai to raise money at home for Czech plant
SEOUL (Reuters) - Hyundai Motor Co <005380.KS>, South Korea's top automaker, is set to raise money at home to fund building an overseas factory as global financial markets grapple with a credit crunch.
Hyundai will borrow 300 million euros ($473.2 million) from state-run Export-Import Bank of Korea (KEXIM) to help set up a 1.1 billion euro factory in the Czech Republic, officials from the company and the bank said.
"Given tough market conditions, it was cheaper to raise money here than abroad," Jake Jang, a Hyundai spokesman told Reuters by telephone without providing details such as interest rates and maturity.
But Jang said Hyundai had no problem raising money in other countries.
A KEXIM official declined to provide details on the loan but said Hyundai had requested the lending.
Hyundai, the world's No.6 auto maker by sales volume along with its affiliate Kia Motors Corp <000270.KS>, borrowed a combined $250 million from the state-run bank in 2006 and 2007 for Hyundai's second factory in India, the official added.
KEXIM said the state-run bank planned to support local companies' overseas projects with financial aid as firms in the global have faced hurdles to raise funds.
"It is difficult to raise big money because of financial market turbulence due to the U.S. subprime problems, but we will actively provide financial aid to overseas projects, which boost local companies' competitiveness," KEXIM said in a statement.
Shares in Hyundai ended down 0.5 percent at 78,500 won, underperforming a 0.1 percent fall in the broader market
Hyundai is building a car factory in the northeast of the Czech Republic, which is scheduled to start mass production from March 2009.
Currently, Hyundai has factories in the United States, China, India and Turkey.
Analysts say overseas units are vital for Hyundai's growth, to shield it from frequent labor disputes at home and sharp movements in the won currency.
(Reporting by Cheon Jong-woo; Editing by Keiron Henderson and Lincoln Feast)