S. Korean businesses spooked by being branded as ‘next Tong Yang’

October 21, 2013 Leave a comment

S. Korean businesses spooked by being branded as ‘next Tong Yang’

Noh Won-myung, Lim Sung-hyun

2013.10.21 14:46:31

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South Korean businesses are spooked by being labeled as the “next Tong Yang,” as rumors abound some companies will follow the fate of Tong Yang Group, which collapsed under the pressure of cash crunch. Companies are fretting about being branded as a potential victim, which could cripple them by turning away lenders irrespective of their actual financial status. Kim Jun-ki, chairman of Dongbu Group, was forced to clarify the financial health of the conglomerate himself Saturday to quell the speculation surrounding the Group.
Also, Doosan Group is also rumored to face cash crunch, after having pursued a series of merger and acquisition deals in the last 10 years and thus seen its debt to equity ratio rise.
The talks has emerged that steelmakers, builders, heavy industry companies, and marine shippers have been troubled by liquidity shortage since the early days of the Tong Yang Group’s crisis. Now a new term, “3D Group,” has been coined to call Tong Yang Group, Dongbu Group and Doosan Group. Choi Soo-hyun, governor of the Financial Supervisory Service, said “there are four more conglomerates like Tong Yang Group. We are investigating and are on lookout for them.”

Filed under Macro Trends

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