65 South Korean firms being restructured
SEOUL, The Korea Herald/Asia News Network
June 28, 2010, 11:47 am TWN
Creditor banks in South Korea said they will put 65 ailing companies including 16 builders under restructuring programs to prevent their problems from damaging the economy.
Six major banks announced the results of assessments of nearly 2,000 companies responsible for more than 50 billion won (US$41.2 million) in bank loans including the top 300 construction firms in terms of building capacity.
Of them, 38 will face creditor-led debt restructuring, including Byucksan Engineering & Construction, Shindongah Engineering & Construction, Namkwang Engineering & Construction and six other construction firms.
The remaining 27 companies will be put under court receivership or to be liquidated if they fail to normalize finances. They include Sungjee Construction Co. and six other construction firms.
The amount of unpaid debts by the 65 companies exceeds 16.7 trillion won, they added.
For other firms suffering from temporary cash shortages, creditors will delay the due date for debt repayment up to two years.
Bank officials say that the number of companies subject to workout or court receivership is more than they expected, due to their stricter yardstick for financial soundness.
"Companies joining debt rescheduling programs put creditors under pressure when seeking short-term profits," Woori Bank CEO Lee Chong-hwi said.
"But we reviewed credit risk of firms strictly to strengthen the country's competitiveness and to improve safety of the financial system," he added.
The lenders appear to comply with the government's strong will to weed out nonviable firms to prevent the ailing firms from dampening the economic recovery.