US-German auto group DaimlerChrysler has converted its holding in Hyundai Motor into global depository receipts (GDRs) as a first step towards the break-up of its ties with the South Korean partner, reports said Tuesday.
The conversion of DaimlerChrysler's 10.44 percent stake worth 835 million euros (one billion dollars) into GDRs was arranged by Citibank, Yonhap news agency said.
Hyundai officials refused to comment but reaffirmed the company was ready to scrap ties with DaimlerChrysler even as it seeks to become one of the world's top five auto firms by 2010.
"(There is) no comment on the reported GDR sale. We would not be taken by surprise even if our partnership with DaimlerChrysler collapses," a Hyundai official said.
GDRs, documents indicating ownership of a commodity stored in a global bank depository, have been favoured as safe tools to sell shares.
DaimlerChrysler has decided not to put more funds into its loss-making Japanese partner, Mitsubishi Motors, while assessing what to do with its Hyundai tie-up.
The London-based Financial Times said Tuesday that DaimlerChrysler would sell the Hyundai stake through a block sale in the open market.
DaimlerChrysler acquired the stake in 2000 for 400 million dollars and forged a strategic alliance with Hyundai but the partnership has been undermined by a dispute about a truck joint venture and projects in China.
Hyundai and DaimlerChrysler agreed to set up the joint venture in July 2000, planning to produce 100,000 of DaimlerChrysler's latest diesel engines from 2004 and 100,000 trucks annually from 2005.
However, Hyundai suspended talks in October last year on the project after DaimlerChrysler moved to launch a separate joint venture with Hyundai's Chinese business partner.
Hyundai accused its Chinese partner, Beijing Automotive Industry Holding Corp (BAIC), of violating a 2002 "exclusive" deal to launch an auto assembly joint venture.
Yonhap said Hyundai, currently the world's seventh largest auto company, plans to establish a holding company in China this month.
"The planned launch of a China holding company is meant to help Hyundai Motor cope with its likely severance of alliance ties with DaimlerChrysler," an unnamed Hyundai official told Yonhap.
He noted the holding company will have an instalment financing company under its wing, as part of a drive to expand auto sales in China. Hyundai aims to increase its output capacity in China.