SK Self-survival Measures Turned Down, Walker Hill Hotel to Be Sold

SK Global’s creditors decided to dispose of SK affiliates’ stocks released by SK Corporation Chairman Choi Tae-won as security while shelving the idea of selling off SK C&C shares needed to control SK Group.

The creditors demanded that SK Global management normalization measures released by SK Group be revised. They accepted a policy that shares and real estate belong to SK Telecom, SK C&C, SK Life and SK Securities as held by SK Global.

Hana Bank, a major creditor bank of SK Global, said that SK Group presented 1 trillion won, and not the 2.2 trillion won proposed by creditors for their program to change debt into shares.

Creditors demanded that 1.4 to 1.5 trillion won worth of domestic sales bonds should be debt-to-equity swap and 600 to 700 billion won worth of overseas sales bonds to be written-off. SK Corporation however, presented only 400 billion to be changed from debt to shares and 600 billion won to be written off, referring to its difficulties in securing sufficient cash flow.

An official from the creditors said that “the two issues would not be conceded. If the problem is its cash flow, we would loan more than 1 trillion won of SK Telecom shares (20 percent) as security.”

Affiliates shares held by SK Global will be all disposed of while SK Telecom shares would be dealt with on their own while other shares of SK Life, Securities and Shipping would be sold off through a third party. Therefore, the three companies would have a new owner.

SK Group also proposed increasing SK Global` s annual cash flow from sales from the current 180 billion won to 400 billion won. In detail, SK Telecom`s Thrunet network usage rate will be raised to 70 percent from the current 30 percent.

Creditors are considering ways to deal with the 40 percent of Walker Hill Hotel shares given by Chairman Choi. The total value of the 3.25 million shares reaches 129.7 billion won at 40490 won per share.

An official from the creditors said, “Chairman Choi is a major shareholder for SK C&C through which he controls SK Group. So, we would put on hold selling SK C&C shares by using it as a way to give pressure to the SK Group.”

Do-Young Kim nirvana1@donga.com