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(LEAD)Creditors decide to salvage Ssangyong E&C
2013-06-14
SEOUL, June 13 (Yonhap) Creditors approved on Thursday a debt workout program for Ssangyong Engineering & Construction Co., bank officials said, a move that could pave the way for the normalization of the South Korean builder.
Woori Bank-led creditors agreed to provide the builder with fresh liquidity worth 445 billion won (US$392.8 million) next week and undertake a debt-to-equity swap worth 277 billion won in July, according to creditor bank officials.
Creditors also said they agreed to provide guarantees for payment worth 240 billion won to Ssangyong E&C to help it win overseas deals.
"The decision by creditors could give a boost to Ssangyong in clinching overseas deals," said Woori Bank spokesman Jung Hee-kyung.
Ssangyong spokesman Cho Dae-hee said that his company will make "utmost efforts to normalize company operations by maximizing its strength in overseas business."
The creditors had been at odds over whether to place the builder under the debt workout program, claiming they had already supplied massive liquidity to Ssangyong E&C.
When lenders Kookmin Bank and Shinhan Bank finally agreed to the debt-rescheduling program, the rescue efforts would gain traction, they said.
The creditors are likely to seek to sell the builder while trying to normalize its operations, they added.
The program, which requires more than 75 percent approval from creditors, will lead the builder to defer its debt repayment and face a corporate overhaul in exchange for a liquidity injection.
Ssangyong E&C suffered from a cash crunch and capital erosion due to massive losses for the second consecutive year in 2012 amid the global economic downturn and the sluggish property market at home.
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