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Big Deal in Crisis

Nov 29,1998
The 'big deal' is in crisis. The whole deal could dissipate due to creditor banks' refusal of the five big chaebols' restructuring plans.
Creditor Banks did not approve the chaebols' restructuring plans regarding rolling stock, petrochemical, and aviation industries, although approval for the oil refining industry's reform was given with certain conditions attached.
Many of the chaebols' subsidiaries which produce semiconductors, generator facilities, and ship engines have the possibility to be involved in a work-out program.
The chaebols feel that the creditor banks' decision was influenced by the government.
The Financial Supervisory Committee (FSC), recently, was discovered telling creditor banks that the 'big deal' should be completely based on market principles.
A source at the government said, 'Insolvent companies of the big five chaebols should be salvaged by a work-out program if they are viable despite large debts to banks. If not, they should be taken out of the market.'
Another source at the government also commented, 'The chairmen of the big five chaebols should realize that the 'big deal' requires the sacrificing of some companies for the good of other companies; they cannot retain all of their repective companies.'
Chaebols are embarrassed and angry by the creditor banks' strong response. 'Creditor banks concluded that they cannot support the petrochemical industry any longer, so the big deal is in danger of folding. If a petrochemical company is taken out of the market, the banks will be damaged, severely', said a source at the FKI. Son Byong Doo, a vice chairman of the Federation of Korean Industries said, 'We will form a revised restructuring plan and will find the best one in consultation with the government.'



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