Results of Corporate Viability Assessment

1. Progress to-date of Corporate Viability Assessment

  • A total of 313 corporates, including corporates in 11 business groups that are recipients of cooperative assistance, as well as troubled corperates belonging to the big 64 business groups were assessed in the recent corporate viability assessment

  • As for the corporates belonging to the top 5 business groups, they were excluded at first as they were deemed to not have problems in connection with repayment of liabilities. However, under the judgement that the assessment of those corporates in accordance to the soundness of the individual corporate is needed as well, they were added onto the list of corporates to be identified

  • Corporate Viability Assessment Committees at each bank came up with internal assessment results by June 13 and following a period of reconciliation to resolve discrepancies among banks the final results were conceived on June 17

  • The banks¡¯ assessment process was based on the principle of voluntary decision-making and after a sufficient level of discussion between members of the assessment committees, objective measures such as voting were utilized to arrive at final results

  • In principle, criteria for viability assessment was left for each bank to decide on their own. However, there were some common criteria. For example, financial standings, capacity to create profit-making opportunities or capabilities to endure financial costs were commonly considered throughout the evaluation process.

    - Instead of evaluating a corporate¡¯s viability under the current high interest rate environment, normal interest rate levels were applied when calculating a corporate¡¯s future value,

    - Much weight was placed on the corporate¡¯s future value when it came to making reconciliation toward the viability of a certain corporate during deliberation sessions between banks.

2. Results of Corporate Viability Assessment

  • The recent assessment revealed that 55 corporates, which represent 17% of total number of corporates subject to the assessment, are subject to mandatory exit

  • Among the 55, 20 corporates are affiliated with the top 5 business groups, 32 with the 6th-64th ranking business groups, while the remaining 3 do not have any affiliation with business groups

    - Corporates that are subject to exit and are affiliated to top 5 business groups are 4 corporates each from Hyundai, Samsung, LG groups, 5 from Daewoo and 3 from SK

    - Among the 6th-64th ranking business groups, 15 business groups including 8 business groups that are recipients of cooperative assistance had either one or more corporates subject to exit

3. Restructuring Scheme

  • Corporates classified as ¡°viable¡± will receive full support from financial institutions, whereas corporates that are classified as ¡°subject to exit¡± will be exited on a timely basis and those that are classified as ¡°subject to restructuring¡± will benefit from proactive support toward restructuring from financial institutions to the degree of self rescue efforts displayed on part of the corporate itself

  • New credit from financial institutions to corporates that face mandatory exit will be suspended. However, for the smooth exit of corporates, upon deliberation between credit banks, a grace period for repayment of loans reaching maturity will be applied until the resolution scheme is finalized

    - Although the fulfillment of liabilities guarantee by affiliate companies is allowed, financial assistance for the purposes of continuing operations will not be permitted

    - Specific timetable and scheme for the exit of such corporates will be set in a timely manner by creditor banks after consultation with the concerned corporates

    - Among the 11 business group recipients of cooperative assistance, 7 business groups, that is, Hanhwa, Dongah Construction, Gohap, Haitai, Shinho, New Core, Hanil will be subject to exit and groupwide restructuring

    - As 4 corporates of the Hanil business group, including a core unit Hanil Textile, are subject to mandatory exit, a serious restructuring of the overall group will be required

    - As for Dongah, it has already announced plans to dispose of all of its affiliates except for Dongah Construction, and the majority shareholder of the group has decided to give up its share holdings as well as management position and has contributed privately owned real estate property

  • Among the rest of the 11 recipients of cooperative assistance, Jinro group will be handled under the mediation and court receivership proceedings and corporates of Jindo, Shinwon, Woobang will, depending on internal decisions, either be exited or will be provided with support toward their restructuring efforts

  • Hyosung, which although is not a recipient of cooperative financing but is facing difficulties in fundings at it¡¯s core unit Hyosung Industries, is subject to the exit of 3 affiliates including Hyosung Media, while other restructuring measures within the group will be pursued such as mergers or sell-offs

  • For those corporates that are under mediation or court receivership, such as Kia and Hanbo, creditor banks will prepare by the end of July schemes to facilitate the legal process or to induce a third party acquisition etc.

List of Non-viable Corporates

o Big 5 Business Groups(20 Companies):
    ¤ıHyundai : Hyundai Livart, Hyundai Construction Equipment Service,
    Suneel Shipping, Hyundai Aluminum Industry
    ¤ıSamsung : Samsung Watch, Lee Chun Electric Mfg., Dae-do Pharmaceutical, Hanil Electric Wire
    ¤ıDaewoo : Korea Industrial System, Korea Automotive Fuel System,
    Orion Electronic Components, Dong Woo Management Consulting, Dae Chang Enterprise
    ¤ıLG : LG Electro-components, Wonjeon Energy, LG Owens Corning Corporation, LG ENC
    ¤ıSK : My TV Co., S.K. Warehousing Co., Kyong Jin Shipping
o 6th ¡­ 64th Business Groups(32 Companies):
    ¤ıSsangyong : Bum-A Petroleum
    ¤ıHanwha¡Ø : Otron, Hanwha Travel Service
    ¤ıDongah¡Ø : Dongah Engineering
    ¤ıHyosung : Tong Kwang Plastic, Hyo Sung Media Co.,
    Hyo Sung One Number Co.
    ¤ıKohap¡Ø : Kohap International Technology Ltd.,
    Kohap Fine Chemical Ltd., Kohap textile, Fashion Creative Network Corp.
    ¤ıHaitai¡Ø : Haitai Stores, Haitai Electronics, Haitai Confectionery
    ¤ıShinho¡Ø : Shinho, Shinho Electronic & Communication, Young Jin Tech.
    ¤ıNew Core¡Ø : Newtown Project Co., Sidae Chuksan, Sidae Distribution
    ¤ıKeo Pyung : Korea Tungsten Mining, Keo Pyung Industry Development Co., Keo Pyung Construction Co.
    ¤ıHanil¡Ø : Hanil Synthetic Fiber, Chinhae Chemical, Namju Development, Shinnam Development
    ¤ıKabool : Shin Han Industry
    ¤ıTongkook : Tongkook General Electronics
    ¤ıTongil : Il Hwa
    ¤ıWoobang¡Ø : Taesung Housing & Construction
    ¤ıHankook Synthetics : E-hwa
    ¡Ø Recipients of cooperative loans

o Non-Group Companies(3 Companies):
    ¤ıDai Han Wool Textile
    ¤ıYang Young Paper Mfg.
    ¤ıFriends, Hospital