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Iraq to pay debts to Hyundai Engineering

SEOUL - Iraq's interim government has vowed to pay off 12-year-old outstanding debts estimated at US$1.1 billion to Hyundai Engineering and Construction Co (HEC), South Korea's largest builder said on Friday.

Iraq's vice construction minister, who has been in South Korea since November 1, was quoted as saying by HEC in a recent meeting that the Iraqi government "will pay back the outstanding debts to HEC and consider necessary procedures for that, such as ways of redemption".

This was the first time that an Iraqi government official had revealed an intention to redeem the outstanding debts to HEC.

Hyundai's difficulties in Iraq date back to 1991, when United Nations-imposed economic sanctions in the wake of the Gulf War led to the freezing of all Iraq-related credit and debts.

At that time, Hyundai held $779 million in outstanding construction bills generated from 16 pre-Gulf War construction projects in Iraq. Including $325 million in unpaid interest, Hyundai's receivable income from Iraq has since ballooned to $1.104 billion.

Redemption of the Iraqi money would drastically improve Hyundai's finances and pave the way for a revival of the company's past glory as South Korea's largest contractor.

HEC is now in a concerted bid to create a so-called "Washington Club", an international body of private creditors for Iraq, which is also proceeding smoothly.

The HEC-proposed group, comprising about 20 corporate creditors from seven or eight countries worldwide, is expected to be set up by year's end.

(Asia Pulse/Yonhap)

Nov 15, 2003

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