SEOUL, March 19 (Yonhap) -- Creditors of Ssangyong Engineering & Construction Co. agreed Tuesday to rescue the troubled builder through a debt-to-equity swap program worth 170 billion won (US$152.9 million), creditor bank officials said.
The builder's creditor banks, including Woori Bank and Shinhan Bank, held a meeting headed by the Financial Supervisory Service (FSS), the country's financial watchdog, later in the day to discuss the matter and agreed to the plan, they said.
The swap will prevent the cash-strapped builder from having to be delisted from the stock market, as it is expected that the company will soon go through a normalization process including a debt workout program.
Earlier this month, creditor banks agreed to delay credit retrievals for the next three months as part of efforts to salvage the nation's 13th-largest builder from the brink of bankruptcy.
Some creditor banks were apparently reluctant to agree to the debt-to-equity swap plan, citing that it may be too risky to inject capital into the company, bank officials said.
Creditor banks have just begun conducting due diligence on Ssangyong E&C to determine ways to deliver a debt workout program to the builder. The results of the due diligence won't be ready until mid-April.
Despite such concerns, creditor banks chose to bail out the company first because being delisted from the stock market will have a much worse impact on the company's debt rescheduling process, along with many of Ssangyong E&C's ongoing overseas contruction projects, they said.
Ssangyong E&C filed for the program on Tuesday after suffering massive losses for the second straight year in 2012 amid the global economic downturn and faltering local property market.
The builder is the former construction arm of the now-defunct Ssangyong Group.
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