Asia Times: Creditors throw out loan lifeline to Daewoo units



	September 08, 1999	atimes.com

The Koreas

Creditors throw out loan lifeline to Daewoo units

SEOUL - Domestic creditors of Daewoo Group have agreed after a four-hour marathon meeting to extend new loans worth 1 trillion won ($838 million) to Daewoo Corp, Daewoo Motor and five Daewoo affiliates.

Interest payments on commercial papers will be decided later in separate negotiations between Daewoo companies and their creditors. Investment trust companies are now demanding interest payments on Daewoo's CPs worth 2.4 trillion won.

Creditors agreed that Daewoo companies should pay the interest on the guaranteed corporate bonds, but asked Seoul Guarantee Insurance to pay instead if the Daewoos cannot afford to. Bonds issued by the 12 Daewoo companies under debt workouts are worth 7.5 trillion won, of which their guarantors must pay interest of 400 billion won within the next three months. Daewoo Capital Management and Diners Club Korea, chosen among the companies subject to debt workout, must shoulder half of the interest on their debts while the remains will be discussed in later debt restructuring.

The seven to receive new funds are Daewoo Corp, Daewoo Motor, Daewoo Electronics, Daewoo Heavy Industries, Daewoo Telecom, Diners Club and Daewoo Capital. They will be receiving 280 billion won in Korean money and $700 million in greenbacks.

Creditors had trouble reaching agreement on the new assistance measure due to strong protest from investment trust companies. The government finally had to step in to settle the interest issue by putting the burden on Seoul Guarantee Insurance.

Major creditor banks held separate meetings for each company starting last Wednesday to discusss operating funds and management replacement.

(Asia Pulse/Yonhap)

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