KDB gives Dongbu group new hopeDongbu Group’s nonfinancial affiliates are taking a short break from their liquidity crisis as creditors try to save companies under the group that urgently need help. But the financial burden is still pressuring the nation’s 17th-largest conglomerate.
According to industry sources, Korea Development Bank (KDB), the main creditor of Dongbu Group, along with its 10 other creditors, held a meeting yesterday at the KDB headquarters in Yeouido, western Seoul, and decided to help Dongbu Steel under a voluntary agreement.
Last week, KDB announced that creditors will pursue a voluntary agreement for Dongbu Steel, the nation’s fourth-largest steelmaker, but wasn’t sure it could execute the plan because it first needed approval from the Korea Credit Guarantee Fund (Kodit).
Unlike a legally binding debt workout program, in order to enter a voluntary agreement, approval from all creditors is required. Kodit holds the largest stake in Dongbu Steel’s 70 billion won ($69 million) worth of corporate bonds, which mature on Saturday.
In yesterday’s meeting, Kodit was reportedly positive about Dongbu Steel entering a voluntary agreement program, but it still wants concrete assurance that it will be the first to get its money back.
Although Dongbu Steel is shaping up to survive, the group has a long road ahead because it is still 5.7 trillion won in debt, with more than 424 billion won of corporate bonds maturing within the remainder of this year.
Furthermore, the KDB said yesterday that it will not give financial support to Dongbu CNI, a systems integration service provider. The nation’s main creditor originally considered injecting 10 billion won into Dongbu CNI but decided to scrap the plan because the company’s debt is mainly from secondary financial institutions.
Dongbu CNI is facing a financial risk as 20 billion won worth of corporate bonds expire on July 7, while an additional 30 billion won matures on July 14.
Dongbu Group’s shares rose 14 percent on the Kospi following expectations that its companies could escape from their liquidity crisis.
BY JOO KYUNG-DON [firstname.lastname@example.org ]