Cell firms Pantech, VK win a chance to recover

The troubled cell phone makers Pantech Group and VK Corp. are slowly making their way back to solvency.
Pantech, which is seeking a workout period, received an extension of one more month to pay back expired debts, while a court approved a court receivership plan for VK, Korea’s fourth-largest cell phone maker.
Creditor banks agreed to extend the debt deadlines for Pantech Group and its affiliate, Pantech & Curitel Communications, by one month and hope to seek a management normalization plan, they said yesterday.
A member of the creditor group said all the bank creditors and most of the parties involved in non-bank credit groups have agreed to the extension of the debt repayment period and that they are working on persuading minor corporate credit holders as well.
In December, the creditor banks of Pantech and Pantech & Curitel agreed to delay debt repayments from the two mobile phone makers for as long as three months, allowing the ailing companies to avoid bankruptcy.
However, the debt rescheduling program remains fragile, as non-bank creditors such as Korea Investment didn’t participate in the stopgap measure. If non-banking creditors call up their debts, Pantech and its affiliate may have to declare bankruptcy.
Recently, Ernst & Young Korea reported that the company’s value would be three times higher intact than shut down. It suggested 120 billion won ($126.7 million) of new funds be introduced for normalization and 500 billion won be converted to stocks. When Pantech enters its workout period, it will focus on the third-generation handset market.
The Suwon District Court approved court receivership for VK last Thursday after receiving unanimous consent from mortgagees and 73.5 percent approval from creditors. VK will pay back 74.2 billion won of its 207.4 billion won debt over a 10-year period beginning this year. The rest of the debts will be converted to stocks or forgiven.
Lee Cheol-sang, former head of VK, will head up the receivership. The firm plans to aggressively develop new products, focusing on the foreign market.
“As new services such as third-generation mobile communications and mobile Internet open up a new market, the handset market, which was saturated, will be given a breather,” said Yoo Soo-geun, head of the policy department at the Information Ministry.

By Lee Weon-ho, Sohn Hae-yong JoongAng Ilbo [wohn@joongang.co.kr]