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Ssangyong E&C creditors reluctant to agree rescue

Following the financially distressed STX Group woes, commercial banks are suffering from critical liquidity problems at Ssangyong Engineering & Construction.

While creditors of Ssangyong E&C have been pressured to bail out the ailing builder by financial authorities, some of them say that it would be better for the authorities to scrap the state effort to rescue the company, highlighting extremely insolvent assets.

Research analysts as well as bank officials estimated that some 1.1 trillion won ($1 billion) should be poured into Ssangyong E&C in total for its management normalization.

Creditors have already provided the company with 370 billion won through their purchase of the company’s insolvent asset-backed commercial paper and support of the debt-for-equity swap deal.

Ssangyong E&C’s net loss amounted to some 400 billion won last year, snowballing from 157 billion won a year ago. This constituted an erosion of its 149 billion won capital, indicating that it is unable to pay off its debt even if it sells all of its assets.

The builder, however, claimed that its high-potential overseas market remained intact, and that the current crisis might be overcome through rehabilitation.

The outlook, however, is still uncertain due to the ongoing blame game between Ssangyong’s creditor banks and the state-run Korea Asset Management Corp.

Earlier this year, KAMCO handed over its shareholdings to the state-run Korea Deposit Insurance Corp. and other creditors.

By Kim Yon-se (kys@heraldcorp.com)
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