Gov't vows to speed up corporate restructuring

By Yoon Ja-young

The government will order three warships worth 3.2 trillion won ($2.7 billion) next month to help shipbuilders survive plunging global demand.

It also vowed to prepare detailed action plans to strengthen the competitiveness of the shipbuilding, shipping, steel and petrochemical industries.

“Corporate restructuring is a difficult process that takes a long time. We can reach desired outcomes only when we continue efforts based on firm principles,” Strategy and Finance Minister Yoo Il-ho said at a ministers’ meeting on industrial restructuring.

The announcement comes amid concern that the political scandal involving President Park Geun-hye and her confidant Choi Soon-sil will weaken momentum for ongoing corporate restructuring as the economy is drifting without a control tower.

The government announced the corporate restructuring plan, which includes ordering 63 ships worth 7.5 trillion won earlier than scheduled.

Among them, 58 ships worth 800 billion won have been ordered so far. It also plans to confirm the order for the three warships within the year. It has already included the plan in a supplementary budget to create demand.

“The government will lead the big three shipbuilders to speed up self-rescue efforts and business restructuring. Cooperation and the sharing of the burden between the management and labor will be a starting point to persuade third parties such as creditors to help,” the minister said.

Creditors unveiled plans to inject 2.8 trillion won into troubled Daewoo Shipbuilding and Marine Engineering (DSME). Hyundai Heavy Industries got 1.5 trillion won by selling its stake in Hyundai Motors and cutting its workforce. Samsung Heavy Industries also completed a self rescue plan raising 500 billion won, while DSME secured 1.5 trillion won.

Regarding shipping companies, Yoo said the government will provide 6.5 trillion won in financial support packages, including the establishment of the so-called Korea Shipping Company. The company will purchase ships from troubled companies and provide them back as charter vessels.

He added that the steel and petrochemical industries will focus on reorganization of businesses that are suffering from a glut. The government is preparing fast-track voluntary restructuring, where businesses can go through shorter legal and administrative procedures under the so-called One-Shot Act.

“Business reorganization through the One-Shot Act will help them preemptively prevent potential risks, while enhancing their competitive edge and profitability. The government will encourage its application in diverse sectors through continuous promotion and incentives,” he said.

The minister stressed that the government will not compromise on principles in corporate restructuring.

“With increasing volatility in the financial market such as rising interest rates, marginal businesses will be negatively affected. The government will continue examining if there are other industries that need preemptive restructuring and reorganization,” he added.