November 27, 1999 
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| November 27, 1999 | atimes.com | |
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| The Koreas Ailing Daewoo gets first aid, but still critical SEOUL - South Korea's ailing Daewoo Group has received emergency treatment with creditors deciding to prevent Daewoo Corp, flagship company of the country's former second largest conglomerate, from going under court management. Thursday's late-night agreement, after seven hours of talks, also bought creditors room both in time and mind to prepare for negotiations with foreign creditors within the next month. Thursday's agreement came as a surprise to creditors themselves, since it was predicted that the option of court receivership was unavoidable. Financial Supervisory Commission Chairman Lee Hun-jai even recommended a new form of court settlement for Daewoo in the belief that domestic creditors were most likely to reject the costly bailout package for the trading house. The expanded meeting of creditors of Daewoo Corp looked bad from the start with most creditors opposed to a debt-to-equity swap of 18.7 trillion won ($16 billion) and deferment of principal payment of 6 trillion won till 2004 plus interest rate cuts. Some insisted that it was crazy to provide new loans worth 1.6 trillion won to an ailing company. The necessary 75-percent vote of approval was only possible after banks and investment trust companies agreed to suspend discussion on the key issue of loss sharing for next time. Main creditor Korea First Bank presented a revised set of proposals, including suspension of the promise for equal loss sharing, and to its surprise, acquired the necessary vote of approval. A creditors' meeting on Daewoo Motor saw a similarly dramatic turnaround after nine hours of talks - creditors agreeing to endorse the workout plan first and discuss losses later. Now the ball is in the court of foreign creditors, whose representatives will arrive in Seoul next week for a final round of talks with the Korean government and banks before deciding whether to take part in the debt workouts. Members of a steering committee of Daewoo's foreign creditors, including HSBC, Chase Manhattan, and Tokyo Mitsubishi, will meet with government, bank, and Daewoo officials next Tuesday. ''The foreign creditors will want to know exactly what will happen to Daewoo Corp and Daewoo Electronics bonds,'' an official of the Corporate Restructuring Coordination Committee said. The government may first offer to agree to the foreign creditors' demand for early settlement of Daewoo Corp's bonds and then negotiate losses. (Asia Pulse/Yonhap) | |||||||||
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