Creditors cut off Hyundai Asan

According to the Economic Times of India:

Creditors stopped providing new loans Thursday to South Korea’s troubled Hyundai Group, which runs a shipping line and major business projects in North Korea, officials said.

Nine of the group’s 12 units will receive no fresh loans “until the group accepts our demands”, said a spokesman for Korea Exchange Bank, the largest of 13 creditors.

The decision does not affect Hyundai’s better-known operations such as automaking and shipbuilding, which were hived off from the original group into financially separate businesses after the 1997-98 financial crisis.

The Hyundai Group includes the country’s biggest bulk carrier Hyundai Merchant Marine and Hyundai Asan, which operates the troubled projects in the North.

The group was picked by creditors in May as a financially distressed conglomerate. But it has refused to sign a deal to sell non-core assets to reduce debts, insisting its financial health is improving.

Debt piled up last year as Hyundai Merchant Marine suffered heavy losses due to the global business slump. However the shipping line posted 154 billion won (126 million dollars) in operating profit in the second quarter of this year.

“Creditors have ignored our position that such a deal will weaken our competitiveness at a time when the group is improving its financial structure,” a group spokeswoman said, without giving total debt figures.

Hyundai, once South Korea’s largest business empire, has been dowgraded to a second-tier conglomerate since its automaking and shipbuilding arms were hived off in 2000 and 2002.

Hyundai Asan’s projects in North Korea, including the Mount Kumgang tourist resort, have been in trouble since a conservative government took office in Seoul in early 2008.

The Kumgang tours were suspended in July 2008 after North Korean soldiers shot dead a Seoul housewife who strayed into a military zone, causing losses to the South Korean company of tens of millions of dollars.

A day trip from the South to the North’s historic city of Kaesong was later also suspended.

Hyundai Asan also operates a jointly-run industrial estate in the North whose operations have sometimes been hit by political tensions.

Read the full story here:
S Korean banks end new loans to Hyundai Group
Economic Times


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