ID :
37370
Thu, 12/25/2008 - 13:10
Auther :
Shortlink :
http://m.oananews.org//node/37370
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Dozens of builders, shipbuilders may face revamp
SEOUL, Dec. 25 (Yonhap) -- At least 40 domestic builders and shipbuilders classified as non-viable are expected to face restructuring following a government announcement that unhealthy firms will be revamped starting in January, financial sources said on Thursday.
On Tuesday, the Financial Supervisory Service (FSS), the country's financial
watchdog, said the government will seek to overhaul the two sectors to prevent
non-viable firms from collapsing, as their insolvency would weigh heavily on the
local economy.
A slowing economy has resulted in a huge number of unsold apartments, and many
cash-strapped small and mid-sized construction firms are struggling to service
debts taken out during the 2005-2006 housing boom.
South Korean shipyards, which secured record orders in recent years due to strong
demand, are also feeling the pinch as the slumping economy and a sharp decline in
new orders, along with foreign exchange losses, are eroding their profitability.
Some smaller players are facing a severe liquidity squeeze.
According to sources, given cash flows, operating profits and the debt ratio, at
least 40 construction firms and smaller shipbuilders could be classified as
candidates for the restructuring.
Market watchers said local automakers, chipmakers and petrochemical firms may
become the next targets for the overhaul.
Kim Jong-chang, governor of the FSS, said that if problems facing carmakers and
chipmakers become serious, the financial watchdog will consider providing funds
as well as restructuring the sectors.
"We are strengthening monitoring of the sectors that could face financial
troubles," an official at a local bank said. "If banks beef up credit risk
assessment for them, more firms could be weeded out."
Local carmakers are coping with a continuing decline in sales at home and
overseas as consumers are cutting back on spending on big-ticket items in the
face of a credit crunch and the deepening economic slowdown.
China's Shanghai Automotive Industry Corp., the parent firm of Ssangyong Motor
Co., warned that it will pull out of from the troubled carmaker if Ssangyong's
labor union resists a restructuring plan.
sooyeon@yna.co.kr
(END)
On Tuesday, the Financial Supervisory Service (FSS), the country's financial
watchdog, said the government will seek to overhaul the two sectors to prevent
non-viable firms from collapsing, as their insolvency would weigh heavily on the
local economy.
A slowing economy has resulted in a huge number of unsold apartments, and many
cash-strapped small and mid-sized construction firms are struggling to service
debts taken out during the 2005-2006 housing boom.
South Korean shipyards, which secured record orders in recent years due to strong
demand, are also feeling the pinch as the slumping economy and a sharp decline in
new orders, along with foreign exchange losses, are eroding their profitability.
Some smaller players are facing a severe liquidity squeeze.
According to sources, given cash flows, operating profits and the debt ratio, at
least 40 construction firms and smaller shipbuilders could be classified as
candidates for the restructuring.
Market watchers said local automakers, chipmakers and petrochemical firms may
become the next targets for the overhaul.
Kim Jong-chang, governor of the FSS, said that if problems facing carmakers and
chipmakers become serious, the financial watchdog will consider providing funds
as well as restructuring the sectors.
"We are strengthening monitoring of the sectors that could face financial
troubles," an official at a local bank said. "If banks beef up credit risk
assessment for them, more firms could be weeded out."
Local carmakers are coping with a continuing decline in sales at home and
overseas as consumers are cutting back on spending on big-ticket items in the
face of a credit crunch and the deepening economic slowdown.
China's Shanghai Automotive Industry Corp., the parent firm of Ssangyong Motor
Co., warned that it will pull out of from the troubled carmaker if Ssangyong's
labor union resists a restructuring plan.
sooyeon@yna.co.kr
(END)
