Exchange Puts Firms on Notice

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Exchange Puts Firms on Notice


Many of the companies listed on the Korea Stock Exchange that are under debt restructuring and received less than qualified reviews in their most recent audits will be classified as supervised issues starting next month.

The exchange places issues on the supervised list to warn investors that the company is on shaky ground.

The exchange said Sunday that it would soon place Ssangyong Motor Company, Daewoo Telecom and Daewoo Electronics Co. on its list of supervised issues because they all failed to receive "unqualified" opinions in their audit reports submitted Friday.

An unqualified opinion from an outside accountant means the company's financial statements are reliable. An "adverse" opinion is used when an auditor concludes financial statements do not fairly represent a firm's financial position, and a "disclaimer" means the auditor is withholding an opinion because it could not gather relevant facts.

"Ssangyong's total debts outweigh its assets so it's doubtful that it can stay in business," said an accountant who worked on the audit of the ailing automaker. "Another 130 billion won ($99 million) in debt isn't reflected fully in its financial statements," the accountant said.

In the most recent audits of the two Daewoo firms, accountants gave disclaimers because they could not obtain sufficient evidence to verify that the company's assets and debts were accurate.

Within the last two weeks the exchange has told Shin Dong Bang, a producer of cooking oil, and Orion Electric Co. that their stocks would go on the supervised list. Five other listed companies that have gone through capital write-offs - Tongkook Corporation, Kabool, Kohap Corp., Maxon Telecom and Myungsung - are also expected to be added.

The exchange will delist the stocks of firms whose issues are placed under supervision if they fail to get unqualified opinions from their auditors for two straight years.



by Rah Hyun-cheol / Oh Jung-hee

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