Getting Mired
It has been found that the Korea National Oil Corporation (KNOC) promised Dana to lend US$300 million in addition after having decided to lend the same amount of money last year. The KNOC acquired the British oil exploration company in 2010 at 3.33 trillion won.
In January this year, the board of directors of the KNOC doubled its loan guarantee for Dana to US$600 million and extended its loan availability period by two years to December 31, 2018. According to industry sources, the decision was made based on Dana’s request with its creditors calling for safeguards while the ongoing drop in oil prices is likely to affect its cash flow and liquidity conditions.
The problem is, however, that the KNOC is in no condition to provide such financing as the corporation itself has to reduce its own debt ratio from as high as 453%.
Besides, the possibility of another crisis on Dana’s part cannot be ruled out if the low oil prices continue for more than two years down the road and survive the expiration date, although the British company managed to buy some time with the loan agreement at this time.