Corporate Restructuring Corporation
The Corporate Restructuring Corporation (CRC), which will be established in Oct., is expected to regulate auto parts and electrical and electronics parts producers, which are recently suffering from sluggish exports, first.
It is said that the authorities have excluded the shipbuilding, construction, and shipping sectors, which have large-scale insolvency, from the list first, and narrowed it down to firms that can normalize the management with funds of 100 billion won (US$84.57 million).
An official from the Financial Services Commission said on Aug. 31, “Currently, the relevant task force team has narrowed down the business sectors for CRC and is conducting a restructuring simulation. By either injecting new money or purchasing non-performing loans, small and medium-sized firms, which can recover with 100 billion won [US$84.57 million], will benefit from the program.”
The authorities believe that it is hard to revive even normal companies if they have been chronically suffering from financial difficulties for more than five years. Also, firms should have sound technology competitiveness, though they are temporarily suffering from difficulties due to the external environments, in order to be part of the program. Accordingly, industry sources say that the first subject will be one of the auto parts and IT parts producers, since they have technology but are temporarily having difficulties due to the recent strong won.
According to data from FnGuide Inc., a financial information services provider, the total operating profits of the listed smartphone parts manufacturers shrank from 698.5 billion won (US$590.7 million) in 2013 to 415.5 billion won (US$351.37 million) last year. Also, the results of the auto parts industry have been rapidly declining from the first half of last year due to the weak yen.