[IWAR] SOUTH KOREA Corporate collapse

From: Michael Wilson (MWILSON/0005514706at_private)
Date: Sun Dec 07 1997 - 10:05:20 PST

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       Posted at 7:17 p.m. PST Saturday, December 6, 1997 
                      Another giant South Korean conglomerate falls
       New York Times News Service
       SEOUL, South Korea -- South Korea's 12th-largest conglomerate collapsed
       Saturday, spurring new fears of a wave of corporate bankruptcies under
       strict financial rules dictated by the International Monetary Fund.
       Halla Group is the sixth of Korea's 30 largest chaebol -- conglomerates
       generally controlled by a single family -- to fail this year after
       borrowing huge amounts of money to finance unsuccessful business
       The collapse of the conglomerates has saddled banks with huge amounts of
       bad debts, crippling the financial system and helping to force Seoul
       into seeking the IMF bailout announced on Wednesday.
       Halla fell into bankruptcy after failing to repay about $200 million in
       debt, according to its creditor banks. Its overall debt totals $5.3
       Halla's bankruptcy could in turn hurt the giant Hyundai Group, which
       lent Halla money. It could also disrupt cripple Korea's automobile
       industry, because a Halla subsidiary is a major supplier of car parts.
       Halla's troubles began well before the IMF announced the program to lend
       South Korea $57 billion or more. But in the past, Halla might have been
       kept alive by its banks, which would have lent it more money. Banks,
       under government guidance, readily provided loans to favored industrial
       conglomerates without worrying too much about the risks.
       But under terms set by the IMF for the bailout, banks must become
       healthy to survive. They can no longer afford to lend good money after
       bad, and in many cases are seeking immediate payments of outstanding
       loans from high-risk clients.
       Halla's ran out of money because its banks would not give it fresh loans
       and called in old ones, Park Sung Suk, vice chairman of Halla Group,
       said at a news conference. Analysts think that other indebted companies
       will face bankruptcy under similar conditions.
       Halla, which is involved in shipbuilding, paper, construction and other
       industries in addition to auto parts, said six of its subsidiaries were
       filing for either court receivership or court mediation to reschedule
       debt payments.
       The biggest problem is with Halla Engineering and Heavy Industries, one
       of Korea's leading shipbuilders. Halla spent billions of dollars on a
       new shipyard, only to face over capacity.
       Halla was founded by Chung In Yung, the younger brother of Chung Ju
       Yung, who started the Hyundai Group, one of Korea's two largest chaebol.
       Hyundai has been lending money to Halla to help keep it going, and there
       is speculation that Hyundai will rescue Halla or buy some of its
       subsidiaries. But the state-owned news agency Yonhap Saturday quoted an
       anonymous Hyundai official as denying this and saying that Hyundai could
       not afford to do more to help Halla.
       )1997 Mercury Center. The information you receive online from Mercury
       Center is protected by the copyright laws of the United States. The
       copyright laws prohibit any copying, redistributing, retransmitting, or
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