Creditors to select large firms for restructuring next week

SEOUL, June 7 (Yonhap) -- Local creditors may order 30 large South Korean conglomerates to push forward restructuring efforts next week following detailed risk assessment reviews, financial sources said Sunday.

The sources said that assessments conducted on 434 large companies with
outstanding credit grants exceeding 50 billion won (US$40 million) showed close
to 10 percent experiencing serious trouble.
"State regulators have called on banks to ferret out all troubled companies that
could speed up market-wide restructuring processes," a representative from a
local bank said. He added that authorities actually rechecked 95 companies in the
shipbuilding and construction sectors that got an earlier positive "B" rating in
January to ensure a thorough review this time around.
Without going into details, creditors said an announcement on companies that
received either "C" or "D" ratings could be made public by Friday, although the
date may be adjusted.
A "C" rating would compel a company to undergo a stringent workout program to
keep afloat, while a "D" rating would lead to outright expulsion from the market.
Both the Financial Services Commission and Financial Supervisory Service (FSS)
said that it will check banks and other creditor institutions starting in July to
make certain they conducted a thorough and fair screening process.
Financial sector insiders, meanwhile, said that evaluations of small and medium-
sized enterprises with outstanding credit grants under 50 billion won but over 5
billion won are underway with those marked for workout and expulsion to be
released by the end of the month.
"The measures are being pursued because there is a steady gain in the percentage
of arrears on loans taken out by SMEs," an FSS official said. He said such
developments require close monitoring of both the corporate sector and creditors.