Hyundai loans rolled over

Creditors granted a rollover of loans to ailing Hyundai Engineering & Construction (HEC), but at the same time they intend to collect the loans if Hyundai's self-relief efforts are lacking.

Hyundai is required to raise nearly 830 billion won through its own resources as creditor banks completely suspended providing fresh loans.

Market analysts say that the rollover of Hyundai's loans even before holding a meeting among creditors involved is a sort of privilege, criticizing that it only will delay the question of Hyundai. However, creditors contend that there are a number of pressure devices to utilize if HEC fails to implement the self-relief plan it announced.

Above all things, creditors say that they would halt the rollover of loans provided to HEC if the company's self-relief plan that it will submit to the creditors soon is lacking. Besides, even if the plan is accepted by the creditors, it includes sanctions if HEC fails to implement what has been promised in a proper way. If that happens, HEC will go bankrupt and be placed under court receivership.

"If more than 25% of creditors oppose Hyundai's self-relief plan, we would hold a meeting and decide suspension of rollover,¡± Lee Yon-Soo, vice president of Korea Exchange Bank, said. ¡°This time, we are going to closely check the actuality of the Hyundai plan."

In this connection, the creditors will not specify a deadline for Hyundai to submit its self-relief plan so that it could take time to work out a practical plan that it can carry out without fail. But it is expected that Hyundai will submit the plan by the end of next week at the latest, bank officials said.

Even if creditors accept Hyundai's loose self-relief plan, HEC's survival might not be guaranteed. If the company fails to pay maturing overseas loans and corporate bonds, which are estimated at about 510 billion won, without fresh loan from domestic banks, Hyundai would face another jeopardy.

An official of Korea Exchange Bank, who is dealing with Hyundai matters, stressed that HEC might have to work out a self-relief plan, not for presentation to creditors or the government but its own survival.

Park Hyeon-Jin witness@donga.com