Creditors of Ssangyong E&C may end workout program

Creditors of the ailing Ssangyong Engineering & Construction Co. may end their financial support to the builder that has been suffering from cash shortages amid a property market slowdown, sources said Sunday.

The main creditor, Woori Bank, plans to ask other creditors whether they will continue their debt-rescheduling program for Ssangyong E&C, according to officials.

If 75 percent of creditors do not approve a proposal for continued liquidity supply, including a debt-to-equity swap, the workout program is likely to be put to an end, forcing the builder to face court receivership.

Ssangyong E&C, 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.

The latest development comes as a row among the creditors has been intensifying as a Seoul court accepted a request from one of the creditors to put a temporary seizure on the builder's accounts worth 78 billion won ($74.2 million).

The Military Mutual Aid Association, a non-profit soldiers' welfare organization, filed the request with the Seoul Central District Court on Dec. 4 in a bid to recoup the money it invested in the builder's project financing.

The creditors' exposure to the builder reached 123.5 billion won, including the interest that could be defaulted, according to the sources.

South Korea's property market has been in the doldrums due to the longstanding economic slowdown and a downturn in housing prices.

The company generated some 34 percent of its total revenue from its overseas business as of the end of September last year, according to its website. (Yonhap News)