Financial authorities are working to placate creditors of Ssangyong Engineering & Construction, as the builder could face a more serious situation than its current debt rescheduling: delisting from the stock market.
The Financial Services Commission’s efforts have been stepped up after the Military Mutual Aid Association moved to provisionally seize the bank accounts of the cash-strapped construction firm.
Over the weekend, the FSC held emergency talks with the company’s creditors -- both financial and non-financial firms. The MMAA belongs to the latter.
As the regulator called for the creditors to reach a consensus on preventing delisting during the gathering, the creditors, including the MMAA, have decided to hold a meeting to fine-tune their agreement on Monday.
They are scheduled to discuss whether to offer more bailout funds to Ssangyong E&C. Another key point is whether the MMAA will scrap its current move to retrieve its credit.
The MMAA has filed with the court for the provisional seizure of the company’s accounts. The court recently endorsed the application.
Following the court’s approval, the builder’s construction work at 150 locations nationwide has been halted.
The military fund made the filing to recoup loans totaling 85 billion won ($77.2 million) and overdue interest of 38.5 billion won, irrespective of the company’s debt-rescheduling timetable, while financial creditors, such as Woori Bank and KB Kookmin Bank, have tolerated the Ssangyong E&C’s overdue payments.
Ssangyong E&C’s net losses amounted to some 400 billion won last year, snowballing from 157 billion won a year ago. This means that it is unable to pay off its debts even if it sells all of its 149 billion won in assets.
The builder, however, claimed that its high-potential overseas market remained intact, and that the current crisis might be overcome through rehabilitation.
Research analysts estimated that more than 300 billion won needs, involving creditors’ debt-for-equity swap, to be poured into Ssangyong E&C to normalize management.
By Kim Yon-se (kys@heraldcorp.com)
