S. Korea's 14 public enterprises placed under state management

The South Korean government has labeled 14 state-run companies, including Korea Electric Power Corp. (KEPCO), as financially distressed entities that require state management and will urge them to sell non-core assets, restructure businesses, and streamline operations and manpower.

During the 8th Steering Committee of Public Institutions meeting on Thursday, the Ministry of Economy and Finance announced that 14 public enterprises need massive restructuring to stay afloat after reviewing 27 state-run companies’ financial soundness.

Any entity that earned a score of less than 14 points out of 20 points from the government’s financial status evaluation or has a debt ratio of more than 200 percent was placed on the list of 14 financially distressed public enterprises.

Of them, nine companies – KEPCO, Korea Hydro & Nuclear Power (KHNP), five energy subsidiaries, Korea District Heating Corp., and Korea Land and Housing (LH) – were categorized as having deteriorating business profitability. The rest including Korea National Oil Corporation (KNOC), Korea Gas Corporation (KOGAS), and Korea Railroad (KORAIL) were labeled as having weak financial structures.

The total debt of the 14 companies amounted to 372.1 trillion won ($288.2 billion), accounting for 64 percent, or two-thirds, of the entire debt of Korea's all 350 state-invested companies.

Under the government’s five-year plan, which is to be set by July to improve the financial health of public enterprises, the state will urge the financially distressed firms to sell non-core assets, modify investment and business plans, and enhance operation efficiency.

“We plan to review the financial soundness plans every six months to evaluate the execution of these plans at the 14 public institutions,” according to the Ministry of Economy and Finance.

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