The disposal efforts will be going on until SsangYong E&C reverts to the government in three months when they fail, for which enforcement ordinance of the Act on the Fund for Repayment of Public Funds has been revised

The Korean government is expected to remain the largest shareholder of SsangYong E&C for a while. With the Non-Performing Asset Management Fund expiring in less than a month, a legal basis has been established for the government to keep its shares even in the case of the liquidation of the fund.

The government held a Cabinet meeting on November 13 and adopted a revised enforcement ordinance of the Act on the Fund for Repayment of Public Funds stipulating which organization and how to manage and dispose of the in-kind assets returned to the Public Fund Redemption Fund (PFRF).

According to the revision, the shares of SsangYong E&C and Daewoo Shipbuilding & Marine Engineering owned by the PFRF, which is run by the Korea Asset Management Corporation (KAMCO), are scheduled to be returned through liquidation within three months after the end of the operation of the fund on November 22. The new enforcement decree clarifies that in-kind assets such as stocks are included in the returnable items.

It means that the KAMCO does not have to sell its shares to a third party and therefore the business uncertainties of those companies can be addressed properly for the time being. Also, the government can buy some time for the disposal of the shares, At least in theory, SsangYong E&C may remain owned by the government until 2027, the final year of public fund redemption.

The Public Fund Oversight Committee (PFOC) is planning to entrust an agency with the management and disposal of the shares next year. The agency is supposed to liquidate the stocks at an opportune time and hand it over to the PFRF, which is managed by the Ministry of Strategy and Finance for such purposes as the redemption of national debts. The agency has to make its efforts to sell the shares at a proper price under the supervision of the Committee. Not only the KAMCO or the Korea Deposit Insurance Corporation but private financial institutions can be the agency.

In this year alone, the KAMCO has made four attempts to dispose of the shares of the builder, only to fail.

“The revision was to prepare clear legal grounds for the period after the operation of the Non-performing Asset Management Fund,” said PFOC manager Park Min-woo, adding, “There is no change at all in our policy stance for the disposal of SsangYong E&C and the others.”

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