Ssangyong E&C can start to rebuild

Ssangyong Engineering & Construction is set to bounce back after creditor banks agreed to its debt workout program.

Led by Woori Bank, creditors are expected to sign a memorandum of understanding with Ssangyong to supply 445 billion won ($395 million) to the builder next week. The deal also will seek a 277 billion won debt-to-equity swap and 240 billion won in bank guarantees.

“We owe a lot to many people by reaching this result,” said an official from Ssangyong E&C. “Especially, we thank creditors and we will normalize our business in the near future by putting out our best effort.”

Ssangyong needed 75 percent of creditors to approve the debt workout plan filed three months ago. Creditors said they would make a decision after due diligence, which this month estimated Ssangyong’s ongoing value at 822.7 billion won, nearly double its liquidating value of 431.8 billion won.

However, some banks were still lukewarm about supporting the cash-strapped builder. Reportedly, holdouts Kookmin and Shinhan banks finally decided to support the workout plan at a meeting this week.

Ssangyong said the fresh funds will first be used to pay subcontractors and suppliers. The nations’ 13th-largest builder has 1,400 suppliers under its wing.

Proceeds from the debt-to-equity swap will be used mainly to improve Ssangyong’s financial statement, end capital erosion and avoid stock market delisting.

Ssangyong said it will focus on getting more overseas projects. The builder reportedly lost some projects in recent weeks because of its financial situation.

Ssangyong, which is known for building of Singapore’s landmark Marina Bay Sands, said it is working to win $4 billion in subway project in the Middle East, $1.2 billion in contracts in Hong Kong, a $6 billion railway construction project in Indonesia and others.

Locally, Ssangyong said it will focus on civil engineering work and only enter private construction projects that have high profit potential and low risk.

The builder also hopes to benefit from demand for apartment remodeling. The government recently revised a law to ease regulations on remodeling to boost the housing market. Ssangyong currently holds remodeling rights for 11,907 apartment units in 14 complexes.

Ssangyong E&C employees expressed relief that the workout deal had been approved. Employees saw their monthly wages cut and some were not paid for the past three months.

By JOO KYUNG-DON [kjoo@joongang.co.kr]