SEOUL: South Korea on Friday said it will step up monitoring the financial performance of debt-laden companies in its effort to overhaul troubled firms and head off bankruptcies and bailouts.
The government said in a statement it will make companies whose profits don’t cover loan interest payments focus on core, profitable business to ensure their debt burdens don’t erode Korea Inc’s global competitiveness.
News of the tightened scrutiny knocked lower the share prices of South Korean shipbuilders, a sector that has wrestled with massive debt and a slowdown in global trade in past years.
“Plans to enhance industry competitiveness will be prepared based on a regular check-up on key sectors,” Finance Minister Kim Dong-yeon said in speech notes from a meeting with other ministers in Seoul.
Kim added that the government will initially inject one trillion won (US$914.29 million) into a previously planned fund in the first half of next year to fend off potential insolvency.
The nation’s shipbuilding sector is still floundering with South Korea’s state lenders having injected more than 7.1 trillion won (US$6.49 billion) into Daewoo Shipbuilding & Marine Engineering Co since 2015, in the biggest bailout of a single company in over a decade.
Hanjin Shipping Co, previously among the world’s largest container lines, was declared bankrupt in February, after its creditor banks halted further support.
Samsung Heavy Industries Co Ltd shares fell 5.5% while Daewoo Shipbuilding & Marine Engineering slumped 1.7%. Mid-sized shipbuilders including Hyundai Mipo Dockyard and Hanjin Heavy Industries & Construction declined 2.5% and 2.2%, respectively. - Reuters
Already a subscriber? Log in
The Star Festive Promo: Get 35% OFF Digital Access
Cancel anytime. Ad-free. Unlimited access with perks.
