Top firms offloading assets en masse

Big businesses in the country are rushing to sell their assets to weather the expected fallout from a prolonged economic downturn, finance new projects and acquire more cash, industry insiders said yesterday.

The sources said that enterprises such as Posco, KCC and Woongjin Holdings have recently taken steps to shed their respective holdings in order to stockpile cash.

Last week, Posco said it may sell the property assets held by some of its units, let go of some of their stakes or try to get them listed separately to improve its finances.

Woongjin Holdings, the holding firm of Woongjin Group, is also seeking to sell its stake in Woongjin Coway, Korea’s biggest maker of water purifiers, to support its solar business and boost the group’s overall financial health.

Last month, KCC, a construction materials maker, secured 697 billion won ($622 million) by selling its stake in Hyundai Heavy Industries, the world’s largest shipbuilder.

KCC also secured a combined 877 billion won last year by unloading its stakes in Mando and Hyundai Motor.

Earlier, KCC announced that it plans to buy a stake worth 774 billion in Samsung Group’s unlisted amusement park operator, Samsung Everland.

“Some companies are hoarding cash as they prepare for a global economic downturn, while others just want to improve their financial liquidity,” said an industry source. “They are opting to save rather than spend.”

Analysts said that securing ample cash is important for companies in times of economic uncertainty. They can also use these reservoirs of money to pursue aggressive investments and mergers when the economy rebounds.

An earlier report showed that bond sales and borrowing by the country’s largest firms hit an all-time high last year as they scurried to secure liquidity to brace for a worsening euro zone debt crisis and to repay maturing debts.

Korea’s top 39 companies sold a combined 43.2 trillion won in bonds in the first 11 months of last year, higher than the 35.1 trillion won floated for the whole of 2010, according to data by FnGuide, a financial information provider.

The latest data marked the highest level since 2009, when they posted a record 41.4 trillion won in debt sales.

Banks’ lending to large firms reached 111.8 trillion won as of the end of October, up 24.5 trillion won from the end of 2010, according to the data.

A rise in corporate debt sales and borrowing came as the global slowdown and Europe’s debt crisis increases economic uncertainty, experts said.

The global downturn will inevitably hit corporate bottom lines as exports account for about 50 percent of the Korean economy.

A bulk of corporate bonds that were sold immediately after the 2008 global financial crisis mature in the first half of this year, prompting more local firms to make efforts to secure liquidity, experts say. In the first half of next year, corporate bonds worth 24.5 trillion won will mature. Yonhap