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SK Seeks to Purchase Ssangyong Oil Refinery

Jan 19,1999
SK Oil Refinery, the largest oil refinery company in Korea, plans to buy Ssangyong Oil Refinery. A source at SK said on January 19, 'We are negotiating with Ssangyong for its purchase. We have also asked Chohung Bank, Ssangyong's main creditor bank, to convert part of the outstanding loans to shares in SK Oil Refinery and extend short-term loans to long-term loans.'
If SK succeeds in acquiring Ssangyong, it will be the most dominant force in the refinery market. Currently, it has 37 percent of the market's share and Ssangyong has 12 percent.
LG-Caltex, the second largest oil refinery company, holds a 32-percent share of the market.
The principal shareholder of Ssangyong is Saudi Arabia-based Aramco while Ssangyong Corporation has only a 28-percent stake, but Ssangyong has retained the complete management rights of Ssangyong Oil Refinery.
Ssangyong Business Group plans to repay the remaining 1.7 trillion won of debt from the now-defunct Ssangyong Motors by the sale of Ssangyong Oil Refinery.
However, creditor banks have stated that it is quite difficult to convert loans to equities, but SK is banking on the fact that banks may have no other option. Negotiations are expected to be complex and lengthy if a deal is to be reached.



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