Ssangyong Cement to be rehabilitated with conditions attached; About 50 companies to be dissolved

The government and creditors are working on measures to rehabilitate Ssangyong Cement with conditions attached. It was reported that among large conglomerates, Jindo Corp. and Choyang Shipping Co. will be dissolved and chances are high for Kabool and Sungshin Cement to be revived due to sharply divided opinions among creditors on the fate of these companies. The government has reportedly selected a list of some 50 companies slated to receive exit orders that will be announced Friday.

A high-ranking official of the Financial Supervisory Service (FSS) said Wednesday that in the case of Ssangyong Cement, which recently attracted foreign investment worth 3.5 billion won from Taiheiyo Cement of Japan, would be rehabilitated if it sells off Ssangyong Information Communication (SIC). Chances are therefore high that creditors would at once place Ssangyong Cement under a debt workout program and then decide whether or not to dissolve it, depending on the results of SIC sales.

The official said that in order to be revived, Ssangyong Cement should have a turnover growth rate of more than 10 percent, but this is difficult due to the lagging construction market. So, he said, if the company reduces its debts from the present 3.4 trillion won to 2 trillion won through sales of SIC at 800 billion won and conversion of debts worth 300 billion won into equities, it will survive.

He added that a decision has already been made to place Suhan under court receivership, and Jindo and Sungshin are likely to be exited while Kabool and Choyang may be revived. He added that about 50 large conglomerates showing signs of insolvency would be dissolved at this time.

They include 30 companies that carry out normal business operations but have no vision and suffer chronic financial difficulties and 15 to 20 already under workout programs or court receivership. The banking sector will hold a creditor consultative meeting to discuss the future of some controversial companies and will fix the list by Friday morning before announcing the results in the afternoon.

In case of companies for which creditors have conflicting views, they need approval of more than 75 percent of creditors based on the value of bonds to stay afloat. It is therefore likely that a considerable number of companies brought to the consultative meeting will be exited.

hcs@donga.com