Receivership for Ssangyong E&CSsangyong E&C applied for court receivership yesterday after it found it impossible to raise capital while undergoing a debt workout program.
There was no choice for the builder as its creditors failed to reach an agreement to help it through severe liquidity problems.
One of the main reasons for the step is that the company is unable to pay back 60 billion won ($56.9 million) to its suppliers. An account-receivable collateral loan comes due at the end of this month.
“The company decided to apply for court receivership because it was worried about further impact on other contractors if we delayed,” an official from the company said.
About 1,400 contractors of Ssangyong are expected to be affected by the company’s decision yesterday.
Until last Friday, the country’s 16th-largest construction company was on the brink of being delisted from the stock market as Ssangyong was expected to list 400 billion won in losses at the end of this year, which would violate the stock market’s capital erosion requirement.
Woori Bank, Ssangyong’s main creditor, had asked other creditors to commit to providing more money by Dec. 28 but none responded. Woori Bank proposed either a 500 billion won debt-to-equity swap to allow the company to stay on 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.
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.
“We will get rid of poor domestic project financing projects and reinforce business overseas through this decision,” a spokesman from Ssangyong said. “Creditors will also understand and help us.”
The decision by the company, which built Singapore’s landmark Marina Bay Sands, is likely to hurt its reputation abroad.
BY SONG SU-HYUN, JOO KYUNG-DON [firstname.lastname@example.org]
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