Korea: Hyundai Engineering capital entirely wiped out by losses

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Wednesday, March 21 12:07 PM SGT

Hyundai Engineering capital exhausted by losses: report SEOUL, March 21 (AFP) - The Korea Stock Exchange said Wednesday it had ordered troubled Hyundai Engineering and Construction Co. (HEC) to explain reports that its entire capital had been wiped out by mounting losses.

The stock exchange acted after the JoongAng Ilbo daily said the construction arm of South Korea's Hyundai Group was again in crisis after mounting losses last year.

HEC had posted a net loss of at least 2.5 trillion won (1.93 billion dollars) last year, exhausting its equity capital of two trillion won, said the major daily.

South Korea's biggest construction firm posted a net loss of 120.9 billion won on sales of 5.7 trillion won in 1999.

The newspaper quoted a Financial Supervisory Service (FSS) official as saying HEC's losses were caused by interest payments and uncollected overseas debts.

The FSS refused to confirm the report saying public accountants have yet to complete an audit of HEC's books.

JoongAng said the amount of HEC's loss would depend on the company's doubtful accounts including 849 million dollars for construction work in Iraq that has never been paid for.

HEC refused to comment on the report saying only that its 2000 results would be announced around March 26.

The company is under pressure from auditors to book 100 percent of unpaid construction bills as a loss in its 2000 results, an HEC spokesman said.

"We are now discussing with an auditor by how much we should reflect the losses from unpaid bills owed by the Iraq government," he said.

HEC has been plagued by prolonged liquidity problems despite a series of debt rollovers and additional loans extended by creditor banks.

The company has a total of 2.4 trillion won in debts which will come due in the first half of this year, including 834 billion won in corporate bonds. Its total debts stood at 4.5 trillion won at the end of last year.

HEC's credit crunch has rattled South Korean markets, triggering worries about the finances of the family-controlled Hyundai conglomerate. Financial institutions have been reluctant to lend to Hyundai units.http://asia.dailynews.yahoo.com/headlines/business/article.html?s=asia/headlines/010321/business/afp/Hyundai_Engineering_capital_exhausted_by_losses__report.html

-- Carl Jenkins (somewherepress@aol.com), March 21, 2001


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