Posted January. 28, 2009 07:06,
The government will complete by the end of next month its evaluation of 94 small and medium-size builders that were not subject to the first restructuring phase of the construction industry.
The fates of four small and medium-size shipbuilders will be decided by the end of March.
Financial authorities said yesterday that the task force for assessing the credit risk of construction companies and shipbuilders under the umbrella of the Korea Federation of Banks will set appraisal standards for 98 small and medium-size builders and shipbuilders by Feb. 5.
Creditor banks will later determine which companies are subject to the second phase of industrial restructuring process based on the standards.
Such banks announced in their first plan on industrial restructuring Jan. 20 that 16 medium and large-size builders and small and medium-size shipbuilders will undergo debt workout or go out of business. In the wake of criticism, however, they will accelerate the pace to deal with the second phase of restructuring.
The task force will ease standards in its second phase of credit risk assessment since most construction companies and shipbuilders subject to the second round are of small or medium size. It will reduce the share of non-financial data, which accounted for 60 percent in the first phase, and lower the benchmark for debt ratio.
Nevertheless, creditor banks said a considerable number of assessed companies will be closed down since most have suffered severe damage to their financial soundness.
They also will begin the workout process or file for court receivership for companies subject to the first phase of restructuring before Friday.
Shinhan Bank, the National Agricultural Cooperative Federation and Korea Exchange Bank held a conference for creditor banks and decided to begin the workout process for Nok Bong Shipbuilding, Lotte Engineering & Machinery MFG, World Construction and Isu Engineering & Construction shortly before the Lunar New Year holidays.
Daedong Construction, which was categorized as subject to workout, filed for court receivership Friday last week. By doing so, the builder will be liquidated soon.
Kookmin Bank will begin its conference for creditor banks to determine the fate of Shinil Engineering and Jinse Shipbuilding today.
Forty-three builders and 10 shipbuilders that received B grades in the first assessment of credit risk and survived will undergo another phase of credit risk assessment based on their recent performances if they want to borrow money from financial institutions. Companies with poor records in last years fourth quarter will be probably subject to industrial restructuring.
A financial authority source said, As industrial restructuring continues, more and more companies will face workout or be forced to close.