By Kim Jae-won
Dongbu Group Chairman Kim Jun-ki is in danger of losing control of Dongbu Insurance because more than 90 percent of shares owned by Kim and his children have been used as collateral for loans, said an online business watchdog Thursday.
Chaebul.com said that Kim, his son Nam-ho and his daughter Joo-won provided 90.08 percent of their shares in the insurance unit as collateral for loans from Hana Bank, Korea Exchange Bank and Korea Development Bank, among others.
The Kim family owns a combined 26 percent stake valued at 900 billion won ($830 million) in the company, according to the watchdog.
Market watchers say the declining price of shares in Dongbu Insurance is threatening the ownership of the Kim family. Creditors of the insurance company may sell the shares seized as collateral, if the price of the shares goes below the value of the loans.
"If the share price of Dongbu Insurance slides under 45,000 won, I'm sure that creditors will sell out the shares which they seize. In that case, share prices of the company will tumble further, a dangerous scenario for the Kim family," said Jeong Seon-seob, CEO of Chaebul.com.
Shares of Dongbu Insurance were traded at 51,400 won per share as of Thursday morning, down 600 won or 1.15 percent from the previous day.
Jeong said that Dongbu Insurance is the most profitable affiliate in Dongbu Group, so collapse of the insurance unit will serve a serious blow to the chairman, who dreams of reviving its old glory.
Dongbu had been one of the 20 largest conglomerates in the country, boasting a business portfolio from insurance to construction to steelmaking, but its credit crunch came from Dongbu Corp., a construction affiliate of the group, which filed for court receivership last month. The builder failed to pay back debts totaling 137 billion won, with retail investors accounting for 23 billion won.
Dongbu Corp., well-known for its Centreville apartments, has struggled to repay the loans since its apartment construction businesses in Seoul, Incheon and Gyeonggi Province were hit by the 2008 global financial crisis.
Affiliates of the group have been under pressure from its creditors to beef up its deteriorating financial situation.
Dongbu Steel, a steelmaking arm of the group, has been undergoing a creditor-driven tough reconstruction program since July, while Dongbu CNI, an information technology (IT) service affiliate of the group, sold part of its business unit for 90 billion won to solve liquidity problems.
 |
Kim Jun-ki |
Chaebul.com said that Kim, his son Nam-ho and his daughter Joo-won provided 90.08 percent of their shares in the insurance unit as collateral for loans from Hana Bank, Korea Exchange Bank and Korea Development Bank, among others.
The Kim family owns a combined 26 percent stake valued at 900 billion won ($830 million) in the company, according to the watchdog.
Market watchers say the declining price of shares in Dongbu Insurance is threatening the ownership of the Kim family. Creditors of the insurance company may sell the shares seized as collateral, if the price of the shares goes below the value of the loans.
"If the share price of Dongbu Insurance slides under 45,000 won, I'm sure that creditors will sell out the shares which they seize. In that case, share prices of the company will tumble further, a dangerous scenario for the Kim family," said Jeong Seon-seob, CEO of Chaebul.com.
Shares of Dongbu Insurance were traded at 51,400 won per share as of Thursday morning, down 600 won or 1.15 percent from the previous day.
Jeong said that Dongbu Insurance is the most profitable affiliate in Dongbu Group, so collapse of the insurance unit will serve a serious blow to the chairman, who dreams of reviving its old glory.
Dongbu had been one of the 20 largest conglomerates in the country, boasting a business portfolio from insurance to construction to steelmaking, but its credit crunch came from Dongbu Corp., a construction affiliate of the group, which filed for court receivership last month. The builder failed to pay back debts totaling 137 billion won, with retail investors accounting for 23 billion won.
Dongbu Corp., well-known for its Centreville apartments, has struggled to repay the loans since its apartment construction businesses in Seoul, Incheon and Gyeonggi Province were hit by the 2008 global financial crisis.
Affiliates of the group have been under pressure from its creditors to beef up its deteriorating financial situation.
Dongbu Steel, a steelmaking arm of the group, has been undergoing a creditor-driven tough reconstruction program since July, while Dongbu CNI, an information technology (IT) service affiliate of the group, sold part of its business unit for 90 billion won to solve liquidity problems.
![[INTERVIEW] Can art become stable investment source?](https://img.koreatimes.co.kr/upload/thumbnailV2/d9b4b117e5b74f4c931de724ebd2ee68.jpg/dims/resize/178/optimize)
![[INTERVIEW] Choi Min-sik, Lee Dong-hwi on creating Korean-style noir with 'Big Bet'](https://img.koreatimes.co.kr/upload/thumbnailV2/8b795a8f6b42492db4e8fdc47e9abd8d.jpg/dims/resize/178/optimize)
