ID :
30953
Tue, 11/18/2008 - 19:49
Auther :
Shortlink :
http://m.oananews.org//node/30953
The shortlink copeid
S. Korean builders urged to join debt program
(ATTN: RECASTS headline, lead; UPDATES with more info and quotes throughout)
SEOUL, Nov. 18 (Yonhap) -- Creditor banks of South Korea's ailing builders encouraged them Tuesday to enter a debt rescheduling program aimed at preventing their collapse, which would wreak havoc on the economy and the banking sector.
With the slowing economy resulting in a huge number of unsold apartments, many
cash-strapped small and mid-sized construction companies are struggling to
service debts taken out during the 2005-2006 housing boom.
"Builders are able to apply for the program until the end of February, 2010,"
said the Korea Federation of Banks (KFB), an association to promote the interests
of the banking industry. "It is possible for builders with poor credit ratings to
submit an application."
If a construction firm agrees to join the program, its creditor bank will roll
over debt by one year or extend new loans. In return for debt rescheduling, the
builder is required to make self-help efforts.
Concern among builders is mounting that applying for the liquidity program may
hurt their reputations as the move could be interpreted by the market to mean
they are facing a severe cash shortage. Builders are also hesitant to join the
program on fears that creditor banks may intervene in a company's management in
return for financial assistance.
The KFB shrugged off such concerns, saying there would be no requirements like
asset sales for builders that apply for the program.
"Local builders are expected to join a debt rescheduling program next week. There
is no reason for jitters as long as their financial health is not terribly bad,"
Yoo Ji-chang, chairman of the KFB, told reporters.
The KFB also said it may be difficult to create a similar liquidity program for
shipbuilders due to time pressure.
South Korea, home to seven of the world's top 10 shipyards, secured record orders
in recent years because of strong demand for crude carriers and offshore
exploration equipment amid high oil prices. But the slumping economy and a sharp
decline in new orders, along with foreign exchange losses are eroding local
shipbuilders' profitability with some smaller shipyards facing a severe liquidity
squeeze.
"Cash-strapped shipbuilders could receive financial assistance through the
government's program to provide liquidity for smaller companies," an official at
the financial watchdog said.
On Oct. 1, the government said it will extend liquidity of about 4.3 trillion won
(US$2.98 billion) to smaller firms to help them ease cash shortages amid the
global financial turmoil.
sooyeon@yna.co.kr
(END)
SEOUL, Nov. 18 (Yonhap) -- Creditor banks of South Korea's ailing builders encouraged them Tuesday to enter a debt rescheduling program aimed at preventing their collapse, which would wreak havoc on the economy and the banking sector.
With the slowing economy resulting in a huge number of unsold apartments, many
cash-strapped small and mid-sized construction companies are struggling to
service debts taken out during the 2005-2006 housing boom.
"Builders are able to apply for the program until the end of February, 2010,"
said the Korea Federation of Banks (KFB), an association to promote the interests
of the banking industry. "It is possible for builders with poor credit ratings to
submit an application."
If a construction firm agrees to join the program, its creditor bank will roll
over debt by one year or extend new loans. In return for debt rescheduling, the
builder is required to make self-help efforts.
Concern among builders is mounting that applying for the liquidity program may
hurt their reputations as the move could be interpreted by the market to mean
they are facing a severe cash shortage. Builders are also hesitant to join the
program on fears that creditor banks may intervene in a company's management in
return for financial assistance.
The KFB shrugged off such concerns, saying there would be no requirements like
asset sales for builders that apply for the program.
"Local builders are expected to join a debt rescheduling program next week. There
is no reason for jitters as long as their financial health is not terribly bad,"
Yoo Ji-chang, chairman of the KFB, told reporters.
The KFB also said it may be difficult to create a similar liquidity program for
shipbuilders due to time pressure.
South Korea, home to seven of the world's top 10 shipyards, secured record orders
in recent years because of strong demand for crude carriers and offshore
exploration equipment amid high oil prices. But the slumping economy and a sharp
decline in new orders, along with foreign exchange losses are eroding local
shipbuilders' profitability with some smaller shipyards facing a severe liquidity
squeeze.
"Cash-strapped shipbuilders could receive financial assistance through the
government's program to provide liquidity for smaller companies," an official at
the financial watchdog said.
On Oct. 1, the government said it will extend liquidity of about 4.3 trillion won
(US$2.98 billion) to smaller firms to help them ease cash shortages amid the
global financial turmoil.
sooyeon@yna.co.kr
(END)