40 Trillion Won Period Industry Stabilization Fund, Support Begins in Earnest... Application Notice Posted

[Asia Economy Reporter Kangwook Cho] The Industrial Stabilization Fund for key industries, established to assist industries facing operational difficulties due to the impact of the novel coronavirus infection (COVID-19), is set to begin full-scale support.

The Industrial Stabilization Fund Management Committee announced on the 7th that it has posted a notice for support applications on the Industrial Stabilization Fund website.

The application procedure requires companies experiencing difficulties such as decreased sales due to the impact of COVID-19 to apply to the Industrial Stabilization Fund after receiving a review opinion from their main creditor bank.

The application must include information on whether there has been a decrease in sales due to COVID-19 and the possibility of normalization through financial support from the fund.

The support targets are the aviation industry (air transportation, air transportation support services) and the shipping industry (maritime transportation, port and other maritime terminal operations, water cargo handling). Eligible companies must have total borrowings of 500 billion KRW or more as of last year's audit report and employ 300 or more workers as of May 1.

The scale of support will be finalized after deliberation by the Industrial Stabilization Fund Management Committee. In principle, repayment of existing loan principal, asset purchase costs, and salary increases are excluded from support. The loan period is generally three years, and applicants can choose between installment or lump-sum repayment methods.

To receive a loan, companies must maintain employment of at least 90% of their workforce as of May 1 for six months from the date of agreement and must strive for employment stability and business improvement. During this period, companies are prohibited from distributing profits to shareholders or repurchasing treasury shares, employees with annual salaries exceeding 200 million KRW as of last year must freeze their compensation, and support to affiliates is prohibited.

At a meeting last week, the Industrial Stabilization Fund Management Committee announced that Korean Air meets the fund support requirements. Accordingly, Korean Air is highly likely to become the first company to receive support from the fund.