Kamco Reduces Debt for Diligent Repayment Rehabilitation Companies... 10 Firms, 3.3 Billion Won

[Asia Economy Reporter Yu Je-hoon] Korea Asset Management Corporation (KAMCO) has waived approximately 3 billion KRW of debt for 10 rehabilitation companies that are diligently repaying their debts.

KAMCO announced on the 13th that it decided to support the swift normalization of management by waiving the debts of rehabilitation companies that are faithfully repaying. Previously, since June last year, KAMCO revised related regulations and established a debt waiver system for faithfully repaying rehabilitation companies.

Accordingly, at the end of December last year, KAMCO waived the remaining debt of 3.28 billion KRW for 10 rehabilitation companies that had faithfully repaid their debts for the first time. A representative case is Company H located in Gimhae-si, Gyeongnam, among the debt-waived companies. This company is a small and strong enterprise holding numerous patents for shipbuilding equipment and produces towing devices for ships.

Company H applied for rehabilitation procedures at the court in 2017 due to the prolonged slump in the shipbuilding industry and was in a situation where it had to sell its factory by 2018 according to the rehabilitation plan. To support Company H's recovery, KAMCO purchased Company H's rehabilitation secured rights, provided DIP financing in 2019, postponed the sale of collateral, and restructured the debt to be repaid in installments over nine years.

Based on KAMCO's support, Company H graduated from the rehabilitation process in 2019 and fully repaid the DIP financing in 2021. Additionally, it was selected for this debt waiver support by faithfully repaying its debt, including early repayment of installment debts within three years.

KAMCO has been promoting management normalization through financial support such as debt restructuring including installment repayments after acquiring claims from rehabilitation companies, loans for working capital, facilities, refinancing (DIP financing), and providing guarantee insurance. With the additional introduction of this debt waiver system, KAMCO has established a comprehensive support program for rehabilitation companies. However, to prevent moral hazard, KAMCO plans to waive the remaining debt only for rehabilitation companies that are expected to be able to repay and have faithfully repaid their debts.

KAMCO stated, "Through the waiver of remaining debts, customized support for rehabilitation companies from liquidity crises to management normalization stages has become possible," and added, "Going forward, KAMCO will strengthen its role as a pacemaker to help rehabilitation companies, which face increasing difficulties due to various economic risks, complete their management normalization."