Ssangyong E&C on brink of delisting

Ssangyong Engineering and Construction is not likely to get additional support from creditors this year to help solve its liquidity crisis, which makes it likely that the nation’s 16th-largest builder will be delisted from the stock market.

According to the company and financial industry sources, Woori Bank, Ssangyong’s main creditor, had asked other creditors to commit to providing more money by yesterday but none responded.

Woori Bank proposed either a 500 billion won ($474 million) debt-to-equity swap to allow the company to stay in the stock market or a 382.9 billion won swap that would not have prevented delisting because Ssangyong’s capital erosion ratio would exceed 50 percent.

Woori Bank also proposed contributing 300 billion won in cash and the resignation of Ssangyong E&C Chairman Kim Suk-joon.

Apparently, creditors didn’t like the idea because 120 billion won would go to the Military Mutual Aid Association which has provisionally seized the cash-strapped builder’s operating funds.

Ssangyong, which is already in a debt workout program, will list 400 billion won in losses at the end of this year, which would violate the stock market’s capital erosion requirement.

Ssangyong emphasized that although stock market delisting seems inevitable, that wouldn’t mean the company is going into court receivership.

“There is still time left, and unless the creditors want to end our debt workout program, court receivership will not happen,” said a spokesman from Ssangyong. “But what’s concerning is that our suppliers and cooperative firms also will be in trouble.”

According to the company, it has to pay at least 60 billion won to suppliers when an account-receivable collateral loan becomes due at the end of this month. Ssangyong is working with about 1,400 SMEs.

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