The Korean government has decided to inject 1.6 trillion won into Doosan Heavy Industries & Construction, a victim of its ill-advised nuclear phase-out policy, through Korea Development Bank and the Export and Import Bank of Korea. In addition, it will begin to discuss liquidity support for large companies, including airlines.
The Ministry of Strategy and Finance, the Financial Services Commission, and the Ministry of Trade, Industry and Energy will discuss ways to provide financial support to large companies struggling due to the spread of the new coronavirus on March 27. The government announced a 100-trillion-won package for the people’s livelihood and financial stability on March 24. The package will be applied to big companies, too, the government said. So, the government began to take steps to support Doosan Heavy Industries & Construction.
Doosan Heavy Industries & Construction is facing a life-or-death crisis due to sluggish orders. The struggling company announced on March 26 that it has signed a one-trillion-won loan agreement with Korea Development Bank and the Export and Import Bank of Korea. Aside from this, Doosan has asked the Export and Import Bank of Korea to turn its payment guarantee for foreign currency bonds worth US$500 million, which matures at the end of April, into a loan.
The airline industry is on the verge of collapse due to the spread of the epidemic. Aviation companies such as Korean Air and Asiana Airlines need state-run banks’ payment guarantees to issue bonds. HDC Hyundai Industrial Development, which took over the Asiana Airlines, requested Korea Development Bank to reinforce its credit support. The bank will reportedly provide support by promptly acquiring its corporate bonds. The government plans to decide on additional support such as repayment based on individual companies’ self-help efforts.