Tuesday, September 11, 2012

Ssangyong of korea


Seen is a bird’s eye view of the W Hotel in Singapore built by Ssangyong Engineering & Construction. The environmentfriendly, luxury hotel with 241 guest rooms is scheduled to open later this month.

/ Courtesy of Ssasngyong E&C

Emergency help to resolve builder’s liquidity crunch

Ssangyong Engineering & Construction (E&C), one of Korea’s major builders specializing in the construction of high-rises, will receive a 200 billion won ($177 million) emergency loan package from its creditors by the end of the month.

The planned financial assistance is expected to significantly improve the builder’s financial standing and provide a boost to its ongoing campaign to win contracts for constructing office buildings and other commercial structures abroad.

The Korea Asset Management Corp. (KAMCO), the largest stakeholder in Ssangyong E&C with a 38.75-percent stake, held a risk management committee meeting last Friday, which decided to provide the builder with 70-billion won of the financial aid.

The state-run asset manager will offer the planned liquidity assistance Tuesday by purchasing project financing asset-backed commercial papers (ABCP) issued by the construction firm.

For weeks, KAMCO held a series of meetings with Woori Bank and other Ssangyong creditors to reach an agreement on the 200 billion won package. They reached a consensus in principle but failed to narrow their differences over details.

KAMCO had sought all creditors to offer financial assistance simultaneously, while Woori Bank-led creditors wanted the asset manager to extend loans first as it is the largest stakeholder.

KAMCO’s move has prompted reluctant creditors to inject the remaining 130 billion won into the builder by September 28.

“We will get things done as quickly as possible and complete the liquidity support before the end of this month,’’ a Woori Bank official said. “All creditors have agreed to this and committed to helping normalize Ssangyong E&C.’’

The official said creditor banks rate the builder highly, adding that the planned liquidity assistance will be provided without a hitch. “Ssangyong is a good construction company. It is only experiencing a short-term cash flow problem.’’

Financial authorities have also been encouraging Ssangyong creditors to extend financial support as it currently undertakes dozens of construction projects at home and abroad worth billions of dollars, in cooperation with over 1,400 subcontractors.

“The builder is a valuable corporation as it has an extensive overseas network and is capable of constructing high-rise structures like the Marina Bay Sands Hotel in Singapore,’’ said a senior official at the Financial Supervisory Service. “Essentially, creditors must solve this problem by reaching an agreement among them. But we will do our part in aiding Ssangyong normalize its operation.’’

The International Contractors Association of Korea (ICAK), a lobby group for builders doing business abroad, also said Korea cannot afford to lose a competitive builder like Ssangyong.

``The builder is vying to win dozens of construction schemes worth around $9.6 billion. If such a company falters, the credibility of domestic construction companies will decline as a whole on foreign markets,’’ an ICAK executive said. “If Ssangyong goes bust, it would deal a serious blow to the country’s construction industry and damage its reputation overseas.’’

Following the 1997-98 Asian financial crisis, Ssangyong E&C and other Ssangyong Group affiliates faced deep financial trouble under mounting debts. KAMCO and other creditors injected capital to rescue the builder in return for company shares in 1999. Since then, creditors have been attempting to dispose of the company.

Despite its unstable status, the builder has emerged as one of the world’s leading engineering and construction firm over the past decade.

It has undertaken a wide range of infrastructure and other construction projects in the Middle East and other parts of the world since its establishment. 

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