Twenty-eight business groups in South Korea have come under scrutiny by their creditors to excessive debt, data showed Monday.

According to data released by the Financial Supervisory Service (FSS), 28 business groups with outstanding debt of more than 1.69 trillion won have been blacklisted as overly indebted.

Under Korea’s banking regulation, a business group goes under excessively indebted category if its outstanding credit balance adds 0.075 percent from the level of the previous year.

This year, the debt threshold for the business groups was 1.69 trillion won, up 7.3 percent from a year ago.

Two firms – KCC Corp. and KG Corp. –were newly added to the list this year while four others – HMM Company, Kumho Petrochemical Co., Homeplus Co., and Dongwon – were removed.

KCC joined the blacklist as debt mounted after its acquisition of U.S. silicone manufacturer Momentive Performance Materials Inc. in May, last year, while KG of Dongbu Steel Co. in September.

Dongwon, HMM, and Kumho Petrochemical were removed after financial credit offering dropped while Homeplus carried out merger with its subsidiary.

As of end of April, 4,726 companies were affiliated with the 28 heavily-indebted business firms, up 3.3 percent from a year ago. Of them, 1,207 were local corporations, up 1.2 percent, while 3,519 were overseas corporations, up 4.1 percent, during the cited period.

Samsung Group had the most number of subsidiaries with 659 companies, followed by Hanwha with 476, SK with 470, CJ with 450, LG with 429, Hyundai Motor with 368, and Lotte with 323.

The number of subsidiaries increased the most at SK and Hanwha – each up by 56 and 50 – while that at Samsung dropped by 30. The FSS said that the changes in number was due to overseas corporations.

As of end of last year, total credit loans issued by financial institutions came to 2,381.7 trillion won, up 5.7 percent from the end of the previous year. The total debt of the 28 business groups in this year’s list reached 244.4 trillion won, up 2.8 percent during the same period, data showed.

Total debt of the top five groups – Hyundai Motor, Samsung, SK, LG, and Lotte – reached 119.9 trillion won, up 3.2 trillion won during the same period. Their debt accounted for 49.1 percent of total credit loans.

Main creditor banks of the 28 business groups are Woori Bank, Korea Development Bank, Hana Bank, Shinhan Bank, and KB Kookmin Bank.

Woori Bank was the main creditor for Samsung, LG, Hanwha, Posco, Doosan, CJ, Hyosung, Kolon, and Daelim, while KDB for Daewoo Shipbuilding & Marine Engineering, Hanjin, Harim, Dongkuk Steel, Daewoo Engineering & Construction, Kumho Asiana, and KG. Hana Bank was main creditor bank for Hyundai Motor, SK, Hyundai Heavy Industries, GS, and SeAh, while Shinhan for Lotte, LS, S-Oil, OCI, and KCC. KB Kookmin Bank held debt for Shinsegae and KT.

Creditor banks, meanwhile, will carry out financial evaluation of the 28 heavily-indebted businesses and sign agreements with those that need improvement in financial structure.

By Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]