Korea Development Bank Convenes Voluntary Council
Lotte Chemical and HD Hyundai Chemical announced on December 3 that they have applied for financial support under the "Agreement on the Operation of the Voluntary Council of Bond Financial Institutions to Support Industrial Structure Innovation."
The two companies submitted a "Business Restructuring Plan" to the Ministry of Trade, Industry and Energy on November 26 in accordance with the "Special Act on Corporate Revitalization," as part of the government-led restructuring of the petrochemical industry. This request for financial support is a follow-up measure to the application for the business restructuring plan. Under the "Business Restructuring Support Agreement" signed in September, the participating bond financial institutions will now begin a thorough review of the companies' preemptive restructuring plans and establish financial support measures.
The two companies pledged to actively cooperate with the due diligence process conducted by the Voluntary Council to review the restructuring plans. They also committed to faithfully implementing the restructuring plans and preparing sufficient self-help measures to secure financial stability and sustainability. They requested that financial support measures be considered to facilitate the provision of new funds needed for competitiveness-enhancing investments such as specialty development, as well as for smooth transactions involving normal business operations and market-based borrowings.
Korea Development Bank will convene a Voluntary Council of Bond Financial Institutions for each company to discuss the submitted restructuring plans and the applications for the "Business Restructuring Support Agreement," and will decide whether to designate the companies as eligible for restructuring.
If the Voluntary Council designates the two companies as eligible for restructuring, joint due diligence will be conducted to assess the validity of the restructuring plans. In addition, self-help plans from the companies and their parent companies, as well as financial support measures from the bond financial institutions, will be prepared to implement the restructuring plans. Financial support refers to all necessary measures for restructuring, such as maturity extensions, interest rate adjustments, and the provision of new funds, on the condition that current financial terms are maintained until the completion of the restructuring.
The support agreement is part of the government's comprehensive plan for restructuring and supporting the petrochemical industry, based on the "Special Act on Corporate Revitalization." Its purpose is to help the industry secure the feasibility and effectiveness of their restructuring plans.
Korea Development Bank stated, "Through the establishment and implementation of these restructuring plans, the two companies are expected to reduce excess capacity, shift to high value-added products, secure financial soundness, and minimize the impact on local economies and employment. We ask for the active interest and cooperation of all stakeholders."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
