Gov"t to Directly Apply the Scalpel to Big Five Chaebols

Home > National > Social Affairs

print dictionary print

Gov"t to Directly Apply the Scalpel to Big Five Chaebols

The government intends to accelerate full scale restructuring for the big five chaebols from now on.
The government plans to target those companies among the big five chaebols which have provided the most debt guarantees for other subsidiaries irrespective of their productivity as companies for 'work out' programs (improving management) by creditor banks.
The government has been stepping up the pressure for the big five groups' restructuring, but as the chaebols have been dragging their feet on real reform, the government will apply the knife directly.
Therefore, the government plans to demand the big five to solve their debt guarantees by companies which belong to other industries within the year and solve debt guarantees between companies in the same industry by March in 2000.
According to the plan, there is a high possibility that such benchmark companies as Hyundai Heavy Industry, Samsung Electronics, Daewoo Heavy Industry, LG Chemicals and SK will be chosen as companies for 'work out' programs.
Concerning the matter, Kang Bong Kyun, senior economic aide for President Kim, said on November 27, ' The big five must submit their plans regarding ways of liquidating subsidiaries with bad operating records. The government will take such measures like the suspension of new loans toward the groups which do not implement the restructuring plan.'
He added that it would be better for the big five to hand over management authority for companies in aircraft and train manufacturing as well as the petrochemical industry to foreign companies if it is possible and in the case of the semiconductor industry, Hyundai and LG will have to merge.
A source at the government forecasted that if companies with bad operating results among the big five are liquidated, the governing structure of the chaebol companies will be dramatically changed in Korea.
In response to the plan by the government, the big five chaebols are to announce their new restructuring plans within December.
The chaebols, not surprisingly, are not satisfied with the government's plan.
The chaebols agree on the basic restructuring plan to sever their mutual debt guarantees.
The big five, however, insist that the government will have to outline the direction and let companies and banks implement concrete details as they see fit.












Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
s
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)