Finance Minister Yoo Il-ho speaks about economy. [Courtesy of Finance Ministry]
Corporate restructuring must follow "legal proceedings" with the government playing a supporting role, he said at a meeting of policymakers. "First of all, there must be efforts by creditors and companies."
Yoo's comment comes as speculation and debate intensify across the board over how to reshape the country's five debt-stricken business fields -- shipbuilding, shipping, steel, construction, and petrochemicals.
Market watchers predicted South Korea's two largest carriers Hanjin Shipping and Hyundai Merchant Marine could be the first target of restructuring.
Last week Hanjin Shipping, one of the world's top ten container carriers in terms of capacity, decided to put it under creditor-led restructuring as its self-rescue plan has made slow progress in a prolonged business slump.
Yoo has warned that Hyundai Merchant could be put under a court receivership if it fails to lower lease rates paid to the owners of chartered ships. Creditors want Hanjin and Hyundai to bring down charter fees and extend non-banking debts. Falling freight rates have been blamed for aggravating their financial woes.
The two shipping companies have been reeling from a snowballing debt. Hanjin's debt stands at 5.6 trillion won while Hyundai Merchant is saddled with a debt of about four billion dollars.
NH Investment and Securities put total credit extended by banking institutions to the two companies at two trillion won, including 790 billion won to Hyundai and 1.2 trillion won to Hanjin.
Creditors have urged them to ride out their liquidity crisis through aggressive restructuring and sales of non-core assets. Hyundai Merchant was put under co-management by creditors late last month, with its maturing debt rolled over.
Hanjin is a subsidiary of the Hanjin Group controlled by Cho Yang-ho, who is also the chairman of South Korea's top carrier Korean Air.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
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