중앙데일리

Big Deal Approval Only For Those With Net Assets

Dec 01,1998
The government intends to approve so called big deals by the big five chaebol companies only for those companies with a positive net asset value.
Any new company formed by way of a merger or any other way must have a postive net asset value. Companies, therefore, must get creditor banks to convert their loans into equity investment or by attracting foreign investment.
Finance Minister Lee Kyu Sung held an economic ministerial meeting with economy ministers on December 1 and agreed on the basic conditions for the big deals by the big five chaebols.
The government pointed out that the big five are trying to transfer only those companies with heavy liabilities rather than ones with net asset values for the big deals which the government has requested they make.
Accordingly, the government intends to press the chaebols to renounce management authority and equity investment toward those companies with negative net asset values.
The government plans to choose at least one or two main companies among the big five chaebol companies as eligible for state supported 'work out' packages while requiring chaebols to liquidate the marginal companies with bad operating records. Chaebol companies must also lower their debt to equity ratio to less than 200% by next year.


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