Woongjin paid own debt before crisis

By Korea Herald
  • Published : Sept 28, 2012 - 19:53
  • Updated : Sept 28, 2012 - 19:53

Woongjin Group is facing public criticism for moral hazard after its holding company and construction unit filed for court receivership on Wednesday.

A day before its application for court protection, Woongjin Holdings was found to have paid back 53 billion won of debt it borrowed from other Woongjin affiliates.

Woongjin Holdings repaid 25 billion won and 28 billion won, respectively, to its sister companies Woongjin Thinkbig and Woongjin Energy on Wednesday even though the due date was two days later on Friday.

Industry watchers say that the company may have paid back the debts to prevent damage to its affiliates because the repayment would be impossible under court control.

“We planned to use the money for a short term. We would not say the repayment was made earlier,” said an Woongjin official.

The group’s debt-ridden arm Kukdong Construction also transferred its 100 percent stake in Ocean Suites Jeju Hotel on another affiliate, Woongjin Food, for 3.4 billion won the day before filing for court receivership.

The hotel is considered a cash cow for its high occupancy rate of 82 percent over the year.

The group explained that the sell-off was made to secure cash, adding that Woongjin Food had to accept a bad deal to acquire the shares.

Kim Hyang-sook, wife of Woongjin Group chairman Yoon Seok-keum, is also suspected of selling all her stocks at Woongjin Thinkbig recently ahead of a potential slump in value under the court receivership.

Since Thursday, Woongjin affiliates have seen their stock prices plunge, while Kim is believed to have avoided financial losses worth around 50 million won.

Now some investors are preparing for lawsuits against the group.

MBK Partners, the nation’s largest private equity fund, is considering legal options in response to the conglomerate’s “unilateral” suspension of sales talks on its water purifier unit Woongjin Coway.

By Lee Ji-yoon (