Heavily-indebted Korean public firms pay over 9 tln won in interest
June 4, 2014 Leave a comment
Updated : 2014-06-02 11:24
Heavily-indebted public firms pay over 9 tln won in interest
Public companies under close government monitoring for their debtproblems spent more than 9 trillion won (US$8.8 billion) last year inpaying for interest on their borrowing, a government report showedMonday.
The government has been closely monitoring 18 public companies,including housing developer LH Corp. , the power company KoreaElectric Power Corp. (KEPCO) and their power generating subsidiaries,which are struggling in the face of rising debt.
This is part of the government’s ongoing “normalization” efforts for thepublic sector, which is often criticized for lax management and pesteringdebt problems.
According to the report by the finance ministry, the 18 publiccompanies under the government’s special monitoring paid a combined9.07 trillion won in interest last year. This amount represented 24.7 billion won every day to pay for interest.
The 18 public companies held a total of 436.1 trillion won in debt lastyear. The interest payment was made for their financial debt out of thetotal liabilities, the report showed.
Their interest payment has been rising steadily over the past few years.The 2013 payment was much higher than the 6.26 trillion won that theypaid in interest in 2009, according to the report.
KEPCO and its six power-generating subsidiaries paid a combined 2.3 trillion won in interest on their debt last year, the largest amount amongthe public companies. Korea Expressway Corp. paid 966.1 billion wonin interest last year.
Of the 18 companies, LH held the largest amount of total debt at theend of 2013, 142.3 trillion won, followed by KEPCO with 104.8 trillionwon. In terms of financial debt, LH and KEPCO also ranked first andsecond with 97.9 trillion won and 61.8 trillion won, respectively, thereport showed.
In April, the government finalized reform plans submitted by thecountry’s 295 public organizations, focusing on tackling worsening debtproblems and reducing excessive welfare programs that ignored thefinancial health of the organizations.
Under the plans, the government expected that public organizationscould reduce their debt by more than 50 trillion won over the comingyears if they carry out the reform measures they have promised.
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