S. Korea picks up pace of corporate revamp

SEOUL, Jan. 19 (Yonhap) -- South Korean banks plan to eliminate one builder from
the market and place 13 construction firms and shipbuilders under debt
rescheduling programs as part of efforts to restructure ailing companies, sources
said Monday.
Since late December, the country's financial watchdog has called on local lenders
to accelerate the process of picking unhealthy construction firms and
shipbuilders in a bid to ensure the supply of much-needed funds to viable
companies and prevent the delay in corporate revamps from weighing on the sharply
slowing economy.
According to sources, out of 111 candidates, local creditor banks have decided to
put 10 builders and three shipbuilders under bank-initiated debt restructuring
programs and kick one teetering construction firm out of the market after
reviewing their credit risks. The final results are set to be announced by
Friday.
Local banks have been hesitant to force troubled companies out of the market,
which government policymakers say is necessary to head off an economic crisis.
A slowing economy has resulted in a huge number of unsold apartments, and many
cash-strapped small- and mid-sized construction firms are struggling to service
debts taken out during the 2005-2006 housing boom.
South Korean shipyards, which secured record orders in recent years due to strong
demand, are also feeling the pinch as the slumping economy and a sharp decline in
new orders, along with foreign exchange losses, are eroding their profitability.
Some smaller players are also facing a severe liquidity squeeze.
sooyeon@yna.co.kr
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