Daeju Construction, C & Heavy Nearing Collapse

Creditor banks will weed out an ailing builder and a shipbuilder based on credit evaluations.

Daeju Construction and C & Heavy Industries will either have to make a turnaround without bank support or face court protection or liquidation.

Creditor banks will also place 11 builders and three shipbuilders under debt workout programs.

They announced yesterday credit assessment results on 112 major construction companies and shipbuilders at a news conference in downtown Seoul.

Banks divided the companies into grades "A" through "D." Eleven builders received a credit rating of “C,” making them subject to debt workout.

The 11 are Keangnam Enterprises; Daedong Construction; Dongmoon Construction; Lotte Engineering & Machinery MFG; Samreung Construction; Samho; Shinil Engineering; Woolim Construction; World Construction; Isu Engineering & Construction; and Poonglim.

Three shipbuilders - Daehan Shipbuilding, Jinse Shipbuilding and Nokbong Shipbuilding – also received a “C” rating.

Banks classified Daeju and C & Heavy as insolvent companies by rating them “D.” Unless the two companies can revive without financial assistance from banks, the two will go under court receivership or be liquidated according to the Integrated Liquidation Act.

Another round of credit evaluations will be conducted next month on the remaining 14 shipbuilders and smaller construction companies.

parky@donga.com