(LEAD) S. Korea to revamp non-viable builders, shipbuilders

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SEOUL, Dec. 23 (Yonhap) -- South Korea's financial watchdog said Tuesday the
government plans to restructure non-viable builders and small-sized shipbuilders
to prevent them from collapsing, which would weigh on the economy.

"Starting early next year, the country plans to begin overhauling construction
firms and smaller shipbuilders suffering from a liquidity squeeze, hit by
financial turmoil and the slowing economy," Kim Jong-chang, governor of the
Financial Supervisory Service (FSS), told a press conference.
Creditor banks plan to assess the credit risks of those companies which are
facing a credit crunch or will suffer the worsening business conditions and will
lead the overall revamp process, the FSS added.
The slowing economy has resulted 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.
South Korea, home to seven of the world's top 10 shipyards, secured record orders
in recent years due to 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.
"This is the time to weed out non-viable firms," Kim said. "Basically, the
government will focus on salvaging local firms through fund injections or
bank-led debt rescheduling programs, but it plans to boldly weed out unhealthy
firms."
Regarding local chipmakers and automakers, Kim said that if their problems become
serious the watchdog plans to provide funds and pursue an overhaul for them as
well.
sooyeon@yna.co.kr
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