IPIC to call default if Hyundai continues dispute

SEOUL, April 8 (Reuters) - International Petroleum Investment Co (IPIC), the largest shareholder in Hyundai Oilbank, said on Tuesday it will demand Hyundai firms sell their 30 percent stake in the refiner unless they scrap "groundless legal disputes".

On March 25, Hyundai Heavy Industries (009540.KS), the second-largest shareholder of Hyundai Oilbank, said it would exercise an option to buy a 70 percent stake in the refiner held by IPIC. [ID:nSEO284914]

The deemed offer had come a day after Hyundai Heavy, the world's biggest shipbuilder, sought a South Korean court injunction to bar the Abu Dhabi-based IPIC from selling its stake in the refiner to third parties.

The option to buy the shares cannot be cancelled, but in the case of disagreement with IPIC, Hyundai can process the option only if a mediation is made. Hyundai Heavy has already sought the judgement of a mediation body under Singapore's International Chamber of Commerce.

"By their conduct in obstructing the bidding process by creating groundless legal disputes and procedural obstacles, the Hyundai Shareholders themselves have materially breached the shareholders' agreement," said IPIC in a statement.

"Unless these breaches are swiftly rectified, Hanocol and IPIC International will declare an Event of Default and demand that, in accordance with the shareholders' agreement, the Hyundai shareholders sell their 30 percent of Hyundai Oilbank shares to Hanocal and IPIC International," the statement added.

Hanocal and IPIC International are subsidiaries of state-owned IPIC, which invests in oil-related projects for the Abu Dhabi government.

Hyundai Heavy, which owns 19.2 percent of Hyundai Oilbank, had previously said IPIC was trying to sell an unspecified part of its stake in Hyundai Oilbank to South Korea's GS Group in violation of an earlier agreement.

According to the shipbuilder, IPIC had agreed last year not to sell its stake in Hyundai Oilbank to third parties until it and Hyundai Heavy resolve a dispute.

Spokesmen for Hyundai Heavy and Hyundai Oilbank were not immediately available to comment.

Hyundai Heavy shares were down 1.74 percent at 396,000 won by 0132 GMT compared to the wider market's 1 percent fall. (Reporting by Angela Moon; Editing by Keiron Henderson)