Ssangyong E&C creditors step up

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Ssangyong E&C creditors step up

Ssangyong Engineering & Construction will likely avoid stock market delisting after creditors decided to rescue the cash-strapped builder through a debt-to-equity swap program.

Ssangyong E&C’s major creditor banks - Woori, Shinhan, KDB, Hana and Kookmin - held a meeting Tuesday arbitrated by the Financial Supervisory Service and agreed to a 167 billion won ($149.6 million) swap.

The agreement needs to be approved by 75 percent of creditors, but the five banks account for 87 percent of the voting rights. Some banks officially sent letters of agreement yesterday to Woori Bank, the main creditor of the builder.

If the debt-to-equity swap program goes according to plan, bonds from KDB (61.3 billion won), Shinhan (24.5 billion won), Kookmin (21 billion won), Woori (6.1 billion won), Hana (6.1 billion won) and other financial institutions (51 billion won) will be switched to Ssangyong E&C shares.

The Korea Exchange has suspended trading of Ssangyong E&C stocks in Kosdaq since last month, citing capital erosion. The company would have been delisted if it didn’t come up with revised financial plan by April 1.

According to media reports, some creditor banks were reluctant about the swap program, saying there has to be a capital reduction first and support from Korea Asset Management Corporation (Kamco), the former largest shareholder.

Kamco, the state-run debt clearer, has been blamed by creditors for not doing its job properly. Kamco last month allocated 38.75 percent of its Ssangyong E&C shares to 23 institutions when its management expired.

Some creditors also planned to enter the debt-to-equity swap program after due diligence results of Ssangyong E&C come out in mid-April. The creditors have recently begun the process to find proper ways to deliver a debt workout program to the builder.

By Joo Kyung-don []
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