Gov't to check Hyundai self-rescue package monthly

The government announced that Hyundai has concluded a special agreement on lending arrangements with creditors in a check on the progress of the Hyundai management restructuring it announced on August 14.

The special agreement is similar to the financial improvement agreement that the largest companies made with their creditors last year. Hyundai would face penalties in financing if it fails to implement the plan it announced.

High-ranking officials of the Financial Supervisory Service said that the government and creditors would check Hyundai`s implementation of its self-relief package monthly through the year`s end and would consider withdrawing existing loans and suspend offering of fresh loans if the chaebol fails to follow the plan.

He also noted that Korea Exchange Bank, the group¡¯s main creditor bank, and Hyundai would conclude a formal agreement on August 16 to guarantee implementation of the self-relief package announced by the group.

The government explained that it had prepared such a safety device to encourage Hyundai to carry forward its will because it failed to implement the reorganization package it announced last May.

Korea Exchange Bank officials said that the agreement would include a clause that provides strong punitive measures, including withdrawal of loans and suspension of fresh loans, if Hyundai does not implement the self-relief plan as scheduled. Creditors are planning to check the progress on the self-relief package each month and report it.

Financial Supervisory Service officials said that it remains a question whether Hyundai will properly implement the self-relief plan, noting that such an agreement is necessary to guarantee stability in the market.

Prior to this, Lee Keun-Young, head of the Financial Supervisory Commission, said August 14 that it would take measures by using its supervisory authority if Hyundai`s implementation of its reform plan appears lacking through a close examination.

Choi Young-Hae moneychoi@donga.com