Published : 2013-12-30 21:21
Updated : 2013-12-30 21:21
Ssangyong Engineering & Construction Co., which has been under a debt workout program, said Monday it has filed for court receivership after its creditors decided not to extend their financial support.
The builder said it has asked the Seoul District Court to help reschedule its debts following a decision by the company board in the afternoon.
The Korea Exchange is expected to suspend trading of Ssangyong Engineering shares on the tech-heavy junior bourse KOSDAQ.
"We are faced with a severe financial crisis that cannot be resolved by our efforts only," Ssangyong said in an e-mailed statement. "Under the circumstances, we have decided to file for court receivership as chances are very high that a tardy decision would deal a heavy blow to our subcontractors and construction projects both at home and abroad."
South Korea's 13th-largest builder by construction capacity has been placed under debt rescheduling since June by its creditor banks after suffering a liquidity crunch. In 2004, the builder was released from a similar workout scheme.
Hopes for new liquidity turned sour after a Seoul court accepted a request from the Military Mutual Aid Association, a non-profit soldiers' welfare organization and one of the creditors, on Dec. 4 for the temporary seizure of Ssangyong funds worth 78 billion won ($74.2 million) to recoup its investment in the builder.
The creditors' exposure to Ssangyong comes to 123.5 billion won, including the interest that could be defaulted, according to sources.
"Local private project financing was the biggest drag on our debt workout program, though we are making operating profits both at home and abroad," the builder said.
Ssangyong said it will work for a speedy recovery through its debt rescheduling program. According to its website, the builder generated about 34 percent of its overall revenue from its overseas business as of the end of September in 2012.
"The decision to file for court receivership is part of our efforts to carry out ongoing overseas projects without any problems," Ssangyong Engineering said.
The prolonged economic downturn since 2008 has sent the local property market into a longstanding slump, negatively impacting local builders. (Yonhap News)