Creditors to select companies needing restructuring this month

SEOUL, May 17 (Yonhap) -- Local creditors are conducting detailed risk assessment
reviews of 430 large companies currently on shaky ground and will name those that
require restructuring this month, industry sources said Sunday.
Without going into details, the sources said creditor banks and other financial
institutions will ferret out companies overly exposed to risks and order
streamlining efforts by the end of May.
Ten conglomerate-sized companies may also be asked to sign pacts by early June
requiring improvements in fiscal health measures to stem a potential fallout down
the road.
The companies may have to sell assets and affiliates to restore confidence, the
sources said.
Creditors have conducted credit risk assessments on 1,422 conglomerates with
outstanding credit grants exceeding 50 billion won (US$39.6 million), and found
problems with the 430.
Of these, those that received a "C" rating will be required to undergo debt
workout programs to cut waste and improve efficiency, while companies that
received the lower "D" rating will be forced to collapse.
Insiders said that similar risk assessments are planed for small- and
medium-sized enterprises and privately owned companies that have large amounts of
debt.
The measures come as the worldwide economic slump has adversely affected the
profits and management conditions of many companies.
Seoul has been pushing large conglomerates to engage in extensive restructuring
efforts. Financial Services Commission chairman Chin Dong-soo said recently that
large conglomerates must take active steps to regain market confidence.
"Failure to do so can result in negative consequences," he warned.
Some conglomerates have been dragging their feet on making changes with the
expectation that the economy will recover in the second half.
yonngong@yna.co.kr
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