Liquidity Support for Ssangyong E&C Settled…Reports about a Crisis Unfounded

SEOUL--(Korea Newswire)--Ssangyong E&C creditors have chosen Woori Bank as its main creditor bank, and shall enter into an intercreditor agreement, completing liquidity support before the end of this month.

An official of Woori Bank, the main creditor bank, said on September 6 “we are planning to conduct due diligence of Ssangyong starting September 7, and call creditor banks according to the intercreditor agreement to promptly provide liquidity support.”

The creditors have chosen Woori Bank as the main creditor bank to accelerate support for Ssangyong. This move is believed to reflect the authorities’ request to find a way to provide financial assistance for Ssangyong as quickly as possible.

“We are planning to get things done as quickly as possible and complete the liquidity support before the end of this month,” said a Woori Bank official. “All other creditors have agreed to this.”

As creditor banks rate the value of Ssangyong relatively high, it seems that liquidity assistance will be provided without any problem.

“If you look into Ssangyong, things are not that bad,” an official representing the creditors said. “The company simply experienced a temporary problem with cash flow.”

“Several media outlets have reported that, if Ssangyong fails to pay off its electronic bills, it will go bankrupt, but that is not true,” said a Korea Asset Management Corporation (KAMCO) official. “Delays in paying off bills happen quite often in the construction industry.”

Meanwhile, KAMCO, its major shareholder, had thought to provide funds to Ssangyong on September 11. On the afternoon of September 7, KAMCO held a risk management committee meeting, and passed a motion to provide liquidity assistance for Ssangyong. The funds are scheduled to be injected as early as September 11 after the resolution of an emergency committee meeting. KAMCO will provide KRW70 billion by purchasing the project financing (PF) asset backed commercial papers (ABCP) possessed by Ssangyong.

KAMCO’s decision to provide funds is expected to expedite the creditors’ agreement to normalize Ssangyong.

“Ssangyong has won a great deal of overseas contracts and has great expertise,” said Hyouk-Se Kwon, Governor of the Financial Supervisory Service, on September 4. “Essentially, creditors must solve this problem by reaching an agreement among themselves, but if an agreement cannot be reached, financial authorities will provide assistance.”

The decision by the authorities to take action to support Ssangyong is because of the symbolism involved. Ssangyong has won contracts for construction work worth KRW3 trillion in Southeast Asia and the Middle East. Indeed, Ssangyong is better-known in overseas markets as a construction company building luxury hotels across Southeast Asia and the Middle East.

“Ssangyong is about to win orders to the tune of $9.6 billion,” said Tae-Yeop Kim, head of the Information Planning Office of the International Contractors Association of Korea. “If such a company falters, the credit rating of domestic construction companies will decline in foreign markets, and it will also make it more difficult to win contracts for foreign customers for those domestic companies that have such outstanding technical skills, given that the competition for landmarks is so fierce.”

A Financial Supervisory Service official said “as Ssangyong is in fact owned by the government, this company will never falter.”

Website: http://www.ssyenc.com

This is a news release distributed by Korea Newswire on behalf of this company.