State-run firms face snowballing debts

Debts of the five largest affiliate organizations of the Ministry of Land, Transport and Maritime Affairs increased by 22.5 trillion won ($1.69 billion) last year as they bore the brunt of the government`s economic stimulus plans.

According to sources, the combined debts of the five largest companies affiliated to the Land Ministry -- Korea National Housing Corp., Korea Land Corp., Korea Expressway Corp., Korea Water Resources Corp. and the Korea Railroad Corp. -- increased by 22.5 trillion won from the 92.2 trillion won recorded at the end of 2007 to come in at 114.7 trillion won at the end of last year.

The organization to see the largest increase in debt was the Korea National Housing Corp., whose debts increased by 12 trillion won from the 39.8 trillion won recorded at the end of 2007 to 51.8 trillion won by the end of last year.

With the rise, the Korea National Housing Corp.`s debt ratio increased from 356 percent to 420 percent.

In addition, the rise in the company`s debts was further accelerated by the company buying up unsold homes and bankrupt rental housing projects.

The Korea National Housing Corp. was followed by Korea Land Corp. The company, which spent large amounts in buying land from construction firms and compensating land owners, saw its debts rise by 6.9 trillion won and its debt ratio by 44 percentage points from 428 percent to 472 percent.

The Korea Expressway Corp.`s debts increased by 2.4 trillion won to 20.2 trillion won, while the Korea Water Resources Corp. and the Korea Railroad Corp. saw their debts rise respectively by 400 billion won and 900 billion won over the same period.

In addition, these companies` debts are expected to rise further this year.

This year the Korea National Housing Corp. plans to invest 15.8 trillion won, much of which will be raised by borrowing, and the Korea Land Corp. is projected to borrow an additional 10 trillion won this year.

The Korea Water Resources Corp., which has one of the smallest debts among state-run companies, is planning to issue bonds to cover about 2 trillion won of the 2.3 trillion won investment planned for the Gyeongin canal.

By Choi He-suk



(cheesuk@heraldm.com)