These are unacceptable requests and if AIG intends to actually stick to the terms, it can be viewed that AIG may want to pull out from the deal

Shim Kyu-Sun Meritz Securities

The US consortium, led by insurer American International Group (AIG), walked out of a due diligence study of three Hyundai financial units after its terms were rejected.

Hyundai Securities called AIG's offer "unacceptable" while analysts accused the US insurer of trying to improve its bargaining position by risking the deal's collapse.

"It's unclear whether we'd be able to sign a final contract in November as planned," said Park Jae-man, a general manager at Hyundai Securities.

In August, AIG agreed to buy Hyundai Securities and two management trusts for 1.1 trillion won (�592.4m; $846m), in return for a government investment of 900bn won.

US attacks to blame

AIG is thought to be pushing for the concessions after announcing it could face $800m in insurance claims after the attacks on the World Trade Center.

"It seems AIG is driving a tougher deal after the US attacks," said Kim Jin-sang, a finance analyst at SG Securities Asia in Seoul.

"They know the Korean government has no choice but to sell the companies overseas, otherwise the government's bailout costs would be too burdensome," he said.

AIG terms

AIG has asked for higher dividend payments for its preferred shares, options to buy further stakes in five years at an agreed price, and the option to withdraw its principal investment after five years.

Hyundai Securities had already lowered the price of the preferred shares to be sold to AIG.

"These are unacceptable requests and if AIG intends to actually stick to the terms, it can be viewed that AIG may want to pull out from the deal," said Meritz Securities analyst Shim Kyu-Sun.

The deal is considered a flagship project by the South Korean government, which is trying to restructure its struggling economy.