Troubled Prime Group companies headed for workout program
The fates of Prime Development Co. and affiliate Sam An Corp. will be decided Friday with their creditors set to decide on whether to allow them to begin debt workouts, sources said Tuesday.
According to industry sources, Nonghyup and other creditors will hold a meeting at 10 a.m. and again at 2 p.m. on Friday to settle the issue.
With Prime Group said to have been negotiating with its creditors on the issue for some time, concerned parties are said to be confident that the application will be accepted. For the process, Prime Group has also switched Sam An’s main creditor from Woori Bank to Nonghyup, which is Prime Development’s main creditor, to facilitate a smoother workout.
Prime Group’s financial troubles began when it bought Dongah Construction and other subsidiaries, as part of which it accumulated 270 billion won debt, and amplified when it failed to sell Sam An and the Techno Mart building in eastern Seoul.
While the two Prime Group firms’ troubles may be nearing their end, a reported showed that other mid-sized construction companies could face crises.
According to a report by NICE Investor Service Co., the proportion of assets held by six mid-sized builders with stable credit ratings exposed to risks have increased by more than 70 percent between 2008 and 2010.
According to the report, the six firms’ risk-exposed assets went from the 1.55 trillion won ($1.45 billion) recorded at the end of 2008 to come in at more than 2.6 trillion won by the end of last year.
The report also showed that in contrast to the apparently stable firms, companies with comparable structures that are in the workout process saw the proportion of their assets exposed to a reduction in risk of 14.9 percent between 2009 and 2010.
By Choi He-suk (
cheesuk@heraldcorp.com)
