Intervention in Restructuring

GM Korea’s union members are demonstrating against the Korea Development Bank’s selling the shares in GM Korea at the front of the Presidential Office on July 17.
GM Korea’s union members are demonstrating against the Korea Development Bank’s selling the shares in GM Korea at the front of the Presidential Office on July 17.

 

The South Korean government is about to intervene in the restructuring of Kumho Tire and GM Korea. To this end, the Financial Services Commission (FSC) recently transferred the management of companies invested by Korea Development Bank (KDB) from the Industrial Finance Division of the Financial Policy Bureau to the Corporate Restructuring Division of the Financial & Corporate Restructuring Policy Bureau.

The Corporate Restructuring Division is the part of the FSC that led the restructuring of the shipbuilding and shipping sectors last year. Specifically, it played a leading role during the restructuring of the three major shipbuilders including Daewoo Shipbuilding & Marine Engineering, Hyundai Merchant Marine’s charter rate negotiations, and the final decision regarding the bankruptcy of Hanjin Shipping.

The division, in fact, was added to the FSC in December 2015 for the restructuring of marginal sectors as a temporary division with a scheduled duration of two years. However, the South Korean government extended its duration to the end of 2018 late last year.

Its new targets are Kumho Tire and GM Korea. KDB announced last year that it would sell its shares in 132 non-financial companies by the end of next year in order to improve its business management. The share sale process has been completed with regard to 105 companies so far and the rest include the automaker and the tire manufacturer.

These days, rumors have it that the former will withdraw from the South Korean car market while the latter is in the middle of a controversy over acquisition by Chinese capitalists. Besides, their business performance has deteriorated a lot recently, causing the government to focus more on them.

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