Investor Is Rebuffed On Lower Loan Rates

Creditors of Ssangyong Cement Industrial Co. will not grant a request by the major shareholder of the ailing firm to cut interest rates on existing loans before the shareholder, a Japanese firm, extends additional capital of 300 billion won ($240 million), Ssangyong said Monday.

Taiheiyo Cement Corporation said that as soon as its discussions with Ssangyong's main creditors are complete, the additional investment will be made. "Taiheiyo borrows at 5 percent from Japanese banks but must pay 13-16 percent in interest to creditors," an Taiheiyo official complained. "Since interest rates in Korea have declined, the rate we pay to creditors should be eased to 10 percent."

But creditors are reluctant, because they have already converted 1.1 trillion worth of Ssangyong's debt to equity. "Taiheiyo already promised the additional investment, so asking for a rate cut is unfair," said an official at Chohung Bank, one of the creditors.

Despite the disagreement, persons on both sides said they believe that the investment will go through. "Taiheiyo already invested $350 million in Ssangyong to become the major shareholder," a Ssangyong official said. "There is no reason for it to refuse the additional amount." A Taiheiyo representative confirmed that the investment is still on.

by Cheong Chul-gun