Seoul: Leading shipbuilding groups are among the 10 or so chaebol facing restructuring in Korea. Korean banks are reviewing chaebols' 2008 balance sheets in order to determine which have the smallest chances of making it through the economic crisis.
Highly-leveraged conglomerates are already exploring the option of selling off units, bringing life to the local M&A market, which has been in a lull since the global financial turmoil began last year.
The lenders, including the industry's largest, Kookmin Bank, hope to complete the credit risk assessment of 45 major business groups by the end of April and draw up a restructuring plan by the end of May for those that come up short.
The debt ratio, interest coverage ratio, total asset turnover ratio and operation income to sales ratio are said to be the key yardsticks in determining which of the groups will be placed under a creditor-driven revamp program, bank officials said.
Some five or six of the 45 business groups were found to have problems in a pre-review conducted in February. But that review was based on conglomerates' financial statements only until September, when financial turmoil swept the world.
The ongoing review, based on the full-year data, is likely to find more conglomerates in need of a complete overhaul.
Seen as the most likely to fail the review are Daewoo Shipbuilding and Marine Engineering Co. and GM Daewoo Auto & Technology Co., which have debt ratios over 500 percent, based on their consolidated financial data.
Business groups such as Hyundai Heavy Industries, Tong Yang, Hanjin, Dongbu, Kolong, Doosan, STX and Taihan Electric Wire also have relatively high ratios of over 200 percent. The debt ratios of Himart and Eugene Corp., are high at 260 percent and 360 percent.
Hynix Semiconductor Inc., which suffered nearly 2 trillion won in operating losses last year, is also mentioned as a possible candidate.
As growing economic and financial difficulties spread in Korea and around the world, some conglomerates are trying to offload some of their sprawling affiliates.
Kumho Asiana is trying to sell its unlisted life insurance unit, Kumho Life Insurance Co. in order to secure cash, but its talks with potential buyers have not made much progress.
Eugene Group has virtually given up its search for a possible buyer of Eugene Securities Co. after a deal with a private equity fund fell apart late last year.
Dongbu Group has asked creditor Korea Development Bank to take over ferro-alloys maker Dongbu Metal Co. in a bid to clean up the balance sheet of its flagship Dongbu HiTek, which owns 100 percent of Dongbu Metal.
Taihan Electric Wire has a plan to raise nearly 3 trillion won by selling its affiliates Taihan ST, a stainless steel products maker, Try Brands Inc., a clothing and underwear maker, and Korea Rental Corp.
Doosan Group, which has sold Techpack in December and its beverage business in January, is now seeking to offload Doosan DST, a defense business arm. [13/04/09]
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