[EDITORIALS]Hyundai's Endless Funding AppetiteIncompetence and irresponsibility by the government and creditors and begging by Hyundai are no longer tolerable. How much longer will Hyundai be kept on life support, and how much more tax money will Hyundai waste, thinking the government won't let it collapse?
Hynix Semiconductor, a Hyundai firm, has yet again asked for financial assistance from its creditors. It demanded that the creditors purchase convertible bonds worth 1 trillion won ($760 million) and extend credit assistance including a syndicated loan. Just a month ago when it received financial assistance from its creditors, Hynix said it would do its best to normalize company operations with that "final" assistance. The government and the creditors also said then that financial assistance given to the electronics company was sufficient and no more would be extended. But the creditors immediately convened a meeting to discuss more aid to the company as soon as Hynix called for help.
Hynix is not alone. The situation with Hyundai Engineering & Construction was so dire that it needed a debt-equity swap of 3.9 trillion won last month. Hyundai Merchant Marine's debt ratio hovered around 1,000 percent at the end of last year. It also borrowed 2 trillion won last year, making the total amount of its loans more than 6 trillion won. In the past year, creditors poured more than 11 trillion won into Hyundai affiliates, including 100 billion won into Hyundai Petrochemical last month.
It is clear that the entire group is nearly bankrupt. Why the government and creditors cannot stand up against Hyundai and why and how much longer this dangerous gamble will continue baffles us. This gamble, which has dragged on for a year now, should cease immediately. It is unfair that the Korean people are being held hostage by the Hyundai Group.
The rationale for further financial assistance and the likelihood of a Hyundai recovery should be clearly explained to the public. It is difficult to understand why a review of financial conditions at the Hyundai Group began only a month ago when 11 trillion won has already been given to it. If the government is unable to explain why the assistance was provided prior to a review, hearings at the National Assembly will be necessary.
If the review reveals the companies cannot survive, they must be shut down. If the government is sure that the companies have a chance to survive and that it is necessary to resuscitate them on public interest grounds, it must explain its position to the people and resolve the problem in a transparent manner.
It has been a year since the Hyundai crisis erupted. The government can no longer postpone a fundamental solution. In particular, the government should stop insisting that the assistance is being provided voluntarily by creditors, and creditors should stop kowtowing to the government and make their own decisions.
The fierce opposition by investment trust companies to the debt-equity swap for Hyundai Engineering & Construction should have been expected, considering that the same scenario played out while dealing with Daewoo Motor. But the government and creditors announced their decision to work on a swap without taking these things into consideration. The echoes of that misstep are still being heard.
Why can't the government say "no" to Hyundai? Is this policy really for the well-being of the Korean people? Or is there some other reason? The government's double standard and lack of planning to deal with the Hyundai crisis will only reduce its credibility in the market.