Green Lights For Survival of SK Global

Creditors of SK Global and SK Group temporarily agreed that SK Corporation would turn some 850 billion won worth of SK Global sales bonds to equities.

The two parties had not reached a consensus over the amount of money that should be turned into equities – the creditors had argued for 1 trillion won while SK Corporation for 450 billion won. However, they met the halfway through a meeting this weekend.

This new agreement would make inevitable liquidation of SK Global and break-up of SK Group.

Hanabank which is a major creditor bank of SK Global said on June 2nd, “SK Group has been suggesting that it would revise the amount up to 850 billion won.”

SK Group has also suggested that it raise SK Global`s annual sales cash flow (EBITDA) from the current 180 billion won to 430 billion won to facilitate SK Global`s capability to repay its debts.

A senior official from Hana Bank said, “We are processing feasibility of self-rescue measures presented by SK Group and business value of SK Global as a continuous corporation. If its EBITDA falls short of our expectations, we would consider turning additional amount into equities.”

Regarding the self-rescue measures by SK Group, major creditor banks such as the Korea Development Bank, Chohung Bank, Woori Bank and Kookmin Bank said, “Such a level would be acceptable” while Shinhan Export-Import Bank demanded 1 trillion won to be turned into equities.

Yoo Ji-chang, President of the Korea Development Bank which is the biggest creditor bank said, “We would accept it if SK Group could compensate for its lack of amount that would be turned into equities.”

Among profits coming from business activities, sales revenues and net profits for the current quarter before subtracting interest and taxes could differ greatly between countries according to how to calculate taxes and accounts. But, EBITDA exactly shows corporate sales condition, which has been used frequently to analyze corporate performance nowadays.

Do-Young Kim nirvana1@donga.com