ID :
137939
Mon, 08/16/2010 - 23:23
Auther :

State land housing developer enters 'emergency mode' amid soaring debt


(ATTN: UPDATES with Moody's rating from para 8)
SEOUL, Aug. 16 (Yonhap) -- South Korea's state-run land and housing development
corporation has entered an "emergency management mode" to cope with soaring debt
caused by excessive spending on large-scale building projects, the company said
Monday.
Korea Land & Housing Corp. (LH), created by the merger of Korea Land Corp. and
Korea National Housing Corp. in 2009, reported debt reaching 118 trillion won
(US$99.3 billion) with interest payments alone hovering at 10 billion won per
day.
LH said it plans to sell off non-essential assets, adjust overall business
operations to reduce waste, better manage liquidity risks and streamline
operations for more efficiency.
Every effort will be made to collect outstanding payments for past projects, with
a comprehensive plan to reduce debt to be announced next month, the company
added.
The depressed local housing market has contributed to difficult times and forced
cancellations of planned construction projects in recent months.
The corporation's main business area centers on improving the country's overall
living conditions, engaging in the efficient management of land, and development
of real estate for economic and industrial use.
It has, however, been engaged in works on behalf of the government that did not
fully reflect market conditions, incurring huge losses.
Related to LH's financial difficulties, Moody's Investor Service said the size of
debt incurred will not affect its credit rating for the public corporation.
The global ratings agency said that it doesn't plan to change its "A1" rating and
"stable" credit outlook since there are no added risks to the corporation,
especially since the government is looking into various support measures. The A1
rating represents the fifth-highest investment grade given by Moody's.
Local analysts argued that Moody's decision reflected the close ties between LH
and the government.
yonngong@yna.co.kr
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