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Sunday, November 5 11:51 AM SGT
Hyundai executives in urgent session to avoid bankruptcy SEOUL, Nov 5 (AFP) - Top executives of the Hyundai Group's ailing construction unit held an urgent meeting Sunday to avoid bankruptcy after creditor banks refused to extend fresh loans.
The meeting was headed by Chung Mong-Hun, who controls Hyundai Engineering and Construction Co. (HEC) but who has resisted pressure from creditors and the government to carry out corporate reforms.
Chung rushed into the group's headquarters Sunday, resisting a barrage of questions from reporters in the lobby.
HEC, the country's biggest construction firm, narrowly avoided bankruptcy once last week. On Friday it narrowly missed being put on a list of 52 debt-stricken firms that creditors say are non-viable.
Twenty-nine of the firms are to be liquidated or put under receivership, including Samsung Group's truck maker and Dong-Ah Construction Industrial Co., once one of the world's biggest civil engineering concerns.
HEC was given another chance to turn itself around. But the reprieve was temporary as creditor banks refused to provide any fresh loans to HEC, which has new debt repayments looming.
Finance and Economy Minister Jin Nyum warned Sunday that the government would not stop second-tier financial institutions collecting loans from HEC.
"The second-tier institutions will not take action only if HEC's management comes up with a detailed and acceptable restructuring plan," Jin told a South Korean television show. He added that HEC could be placed under court receivership if it failed to pay debts.
HEC has debts of about 4.5 billion dollars, with almost one billion dollars due before the end of the year, according to creditors.
It narrowly avoided being declared bankrupt early last week after failing to pay promissory notes. These were eventually paid a day late.
The reprieve reflected government concerns over short-term shocks to the economy. The closure of the firms is expected to leave several thousand people unemployed. However, analysts said financial markets would be rattled by long-term uncertainties.
"The government has finished its long-overdue homework, but the work is not good enough to get top marks," SK Securities analyst Oh Sang-Hoon said.
Suh Hong-Seok of Daishin Securities said: "In reality, the government has postponed its decision until the end of the year.
"The non-viable companies list lacks substance, and this is a result of cautious moves by creditor banks ahead of a bank sector restructuring scheme," Suh said, adding Hyundai would try to buy time.
Chung Mong-Hun, the largest shareholder in Hyundai Engineering and son of the Hyundai Group founder Chung Ju-Yung, returned from a long trip overseas on Thursday to negotiate the conditions of a new rescue package.
The two Chungs are under pressure to make substantial contributions out of their own personal wealth to help Hyundai Engineering.
Creditors have urged the group founder and his sons to share the cost of resolving HEC's credit crisis which has aggravated debt problems of other companies in the Hyundai empire.
-- Carl Jenkins (firstname.lastname@example.org), November 05, 2000