S. Korea to restructure 16 builders, shipbuilders

SEOUL, Jan. 20 (Yonhap) -- South Korean banks have decided to kick an ailing
builder and a shipbuilder out of the market and place 14 construction firms and
shipyards under debt rescheduling programs, an industry association said Tuesday.
Amid the global financial turmoil and economic downturn, local construction firms
and small and mid-sized shipbuilders have been feeling the pinch with some facing
a severe liquidity squeeze.
"Creditor banks decided to weed out Daeju Construction Co. and C&Heavy Industries
Co. and to put 11 builders and three shipbuilders under a bank-initiated debt
rescheduling program," the Korea Federation of Banks said in a statement.
Since late December, the country's financial watchdog has called on local lenders
to accelerate the process of singling out 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.
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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