Meanwhile, South Korea's LG Group said it agreed to sell chip unit LG Semicon to Hyundai in a securities-and-cash deal worth $2.14 billion.

However, Hyundai officials said they weren't aware of a final agreement.

As part of the revamp, the chaebol will slash the number of its subsidiaries to 26 from 79 and reduce its debt-to-equity ratio to less than 200 per cent by the end of 1999.

In addition, it will break itself into five smaller business groups by 2003 and will spin off Hyundai Motor Co sometime next year, the conglomerate's corporate-restructuring committee chairman Park Se Yong said.

The group's plans for this year include raising $4.5 billion in foreign capital, paying off 33.9 trillion won in debt and spinning off 13 units through sales or joint ventures, Park said at anews conference.

It is looking to cut its debt through asset sales, rights offerings and by attracting foreign investment, he added. Of the $4.5 billion in foreign capital that Hyundai Group plans to raise in 1999, more than a third, or $1.76 billion, was raised by the end of March.

The 13 units that Hyundai group plans to spin off this year include Keum Kang Development Industry Co, Hyundai Fire and Marine Insurance Co, Dongsu Industrial Co and Korea Flange Co.

Park said 15 units will be merged, but he didn't provide details. The units targeted for mergers include Hyundai International Merchant Bank, Kangwon Bank and Hyundai Engineering & Construction.

Hyundai was the second chaebol this week to announce a major overhaul.

Daewoo group announced plans for large-scale asset sales that would dramatically reduce its business, offering hope that economic reform will shift into high gear.

South Korea's business groups have been under intense pressure from the Government to reform. Lastweek, President Kim Dae Jung threatened that banks would halt new lending to chaebols that failed to fulfill their restructuring promises.

News that Hyundai will restructure helped the Korea Composite Stock Price Index close Friday morning's session up 10.16 points, or 1.3 per cent, at 750.56.