Ssangyong creditors drag their feet on workout plan

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Ssangyong creditors drag their feet on workout plan

Ssangyong Engineering & Construction’s path to a debt workout program is getting rougher as some creditor banks are reluctant to inject additional funds to revive nation’s 13th largest builder.

According to industry sources, Woori Bank, Ssangyong’s main creditor, asked other creditor banks to support a plan to supply an additional 552 billion won ($487 million) to the cash-strapped builder, but there has been no agreement.

Korea Development Bank held a meeting on the issue Tuesday, while Hana Bank and Korea Exchange Bank are reportedly meeting today to make a decision. Shinhan Bank is also set to met on the matter this week.

These creditor banks first must decide whether they will approve a 107 billion won debt-equity swap to supply extra 445 billion won. However, banks apparently think that is too much money. Ssangyong filed for a debt workout program in March. Creditors said at the time they would make a decision on injecting more money after due diligence. The result came out this month and showed Ssangyong’s going-concern value was estimated at 822.7 billion won, nearly double its liquidating value of 431.8 billion won.

However, creditor banks are still pondering Ssangyong’s debt workout program at a time when the builder desperately needs additional cash.

In order for the builder to proceed with a debt workout, it needs 75 percent approval from creditors. Woori Bank has the biggest voting bloc at 24 percent, while five other banks have a combined 45 percent of votes. Seoul Guarantee Insurance Company has 15 percent and other creditors 16 percent.

Ssangyong has urged creditors to approve the debt workout quickly as it is bidding on overseas projects worth a total of 8 trillion won.

Industry insiders said creditors will eventually have to approve Ssangyong’s debt workout.

If Ssangyong fails to get more funds, 1,400 suppliers would be affected and more than 2.1 trillion won in damages relating to project financing and financial guarantees would occur.


By Joo Kyung-don [kjoo@joongang.co.kr]

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