28 BUSINESS GROUPS IN SOUTH KOREA UNDER HEAVY DEBT

Highlights –

  • 28 Business groups in South Korea under scrutiny for heavy debt.
  • A debt of more than $1 billion.
  • KCC Corp. and KG Corp.were newly added to the list this year.
  • Hyundai Motor, Samsung, SK, LG, and Lotte reached $9.6 billion.

According to data released by the Financial Supervisory Service (FSS) on Monday, 28 business groups have an outstanding debt of more than $1 billion and they have been blacklisted as overly indebted.

Under Korea’s banking regulation, a business group goes under an excessively indebted category if its outstanding credit balance adds 0.075 percent from the level of the previous year.

This year, the debt threshold for the business groups was $1 billion, up 7.3 percent from a year ago.

According to data two firms – KCC Corp. and KG Corp. – were newly added to the list this year while four others – HMM Company, Kumho Petrochemical Co., Homeplus Co., and Dongwon – were removed.

KCC joined the blacklist as debt mounted after its acquisition of U.S. silicone manufacturer Momentive Performance Materials Inc. in May, last year, while KG of Dongbu Steel Co. in September.

Dongwon, HMM, and Kumho Petrochemical were removed after financial credit offerings dropped while Homeplus carried out a merger with its subsidiary.

According to a report by the Pulse Business News Korea, as of the end of April, 4,726 companies were affiliated with the 28 heavily-indebted business firms, up 3.3 percent from a year ago. Of them, 1,207 were local corporations, up 1.2 percent, while 3,519 were overseas corporations, up 4.1 percent.

As of the end of last year, total credit loans issued by financial institutions came to $19.1 billion, up 5.7 percent from the end of the previous year. The total debt of the 28 business groups in this year’s list reached $19.6 billion, up 2.8 percent during the same period.

Total debt of the top five groups – Hyundai Motor, Samsung, SK, LG, and Lotte – reached $9.6 billion, up $2.5 billion during the same period. Their debt accounted for 49.1 percent of total credit loans.