Taihan to lower debt level

By Kim Yoo-chul

Staff reporter

Taihan Electric Wire, the Korea-based supplier of electrical wire and stainless steel, said it would aim to lower its debt level significantly this year compared to last year, its chairman said, Thursday.

Financial markets welcomed the plan. Shares rose by 6.76 percent to end at 11,050 won on the nation's main bourse, the Korea Exchange (KRX) said.

Heavy debt has been cited by analysts as the biggest burden to distract Taihan's plan of normalizing its dismal business.

Chairman Son Kwan-ho said it will lower the total debt level below 1.5 trillion won by the end of this year from 2.2 trillion won, last year.

``In order to achieve the target, Taihan will sell some of our core assets. Talks have been under way with several buyers,'' Son told reporters in a press conference held in a Seoul hotel.

As of the end of first half, the total debt level by Taihan was 1.9 trillion won from 2.2 trillion won in 2009.

Son said the company has secured 600 billion won in cash liquidity as of the end of June by issuing new shares and selling stakes in Italian cable maker Prysmian. Taihan plans to boost the liquidity level to 1 trillion won throughout this year.

``We will issue new shares if needed, though nothing has been decided yet.''

Months ago, Taihan sold its 9.9 percent stake in the Italian cable manufacturer for 400 billion won ($348 million) to back up its deteriorating cash balances. In 2007, Taihan bought the world's No. 2 cable maker Prysmian for 510 billion won.

``Taihan will speed up the process of selling our assets. Prices don't matter. We are ready to sell even below market prices because Taiwan doesn't have much time to hesitate,'' according to the chairman.

He, however, said it will not launch any big lay-off campaigns.

Son also said the company will focus on its key businesses and added it will not drive mergers and acquisition (M&A) deals and hold off its plan to diversify businesses.

``Taihan needs to get back to basics. It's true that bold approaches towards business diversification have failed,'' he said.

Taihan was aggressive to expand its international profile over the last few years. The result, however, was catastrophic. Bold M&A moves hit its financial soundness. As of last year, the debt ratio was 350 percent from 80 percent in 2006.

Last year, Taihan had signed main creditors' banks for a financial improvement plan. ``I will make a company that doesn't have any receivership from 2010,'' according to Son.

Taihan aims to reap 100 billion won in operating profit for 2010.

Son, who was the former chief executive at SK Construction, was named the new chairman of Taihan by its shareholders early this month.