SEOUL. Nov 10: South Korea's giant Hyundai conglomerate moved a step closer to disintegration Friday, with its former flagship auto company-refusing to bail out its once-mighty construction firm, reports AP.

The spat between Hyundai Motor Co and Hyundai Engineering & Construction Co stemmed from a family feud aggravated by government pressure on the nation's largest conglomerate to divide Itself into independent and efficient subdivisions.

For days. Chung Mong-hun. who controls Hyundai Engineering & Construction and many other Hyundai affiliates, tried in vain to meet his estranged brother. Hyundai Motor Chairman Mong-ku. to seek financial support to save the nation s No I builder from near-bankruptcy.

Mong-ku spun off his Hyundai Motor. Kia Motor and other auto-related Hyundai affiliates

earlier this year after he lost to his younger brother. Mong-hun. in a struggle for leadership over the US 875 billion conglomerate.

"By law. we have completed our separation from Hyundai. We have no interest In helping Hyundai Engineering & Construction." said Lee Ke-an. president of Hyundai Motor, the nation's No 1 carmaker.

Hyundai Engineering must raise S818 million In new funds to cut one-fifth of Its total debt by year end. Otherwise, government-controlled banks say they would declare the firm bankrupt an J take it over through debt-for-equity swapping

A typical South Korean conglomerate is a fleet of dozens of firms interlocked through cross-funding and cross-debt guarantees. Healthy affiliates used to quickly marshal resources to ball out troubled subsidiaries.

As Mong-hun's Hyundai Engineering sank into financial ( risis. some market observers speculated that Mong-ku might step in to help his estranged brother. But Hyundai Motor's refusal to help was a rejection of old bailout practices.

"We must strictly differentiate between personal matters and company affairs." Lee said.

Mong-hun's aides said Hyundai Engineering could put together a satisfactory self-rescue programme without Hyundai Motors help. He planned to sell stock and real estate holdings.

The Hyundai carmaker has remained lucrative. while Hyundai Engineering has become the latest example of a big South Korean business • suffering financial turmoil after expanding on borrowed money

The construction firm was expected to generate dlrs 63 million in profits this year. But it was not enough to pav interest and repay millions of dollars

of loans coining due even’ week.

South Korea is urging debt-ridden big businesses to cut debt to restore investor confidence in the economy, or face bankruptcy.

Also Friday. Daewoo Motor Co. the nation's third largest carmaker, applied for court receivership, two days after it went bankrupt.

The court was expected to freeze all debts and assets and Install new management within a week while it deliberates whether to pul the company under court receivership. The process usually lake a month.

The company said it could launch more vigorous restructuring under court receivership.

Credit banks declared Daewoo Motor bankrupt Wednesday. after the company's labour union rejected the management's restructuring plan, which would shed 18 per cent of the carmaker's 18.000 work-