Providing 1.1 Trillion Won Liquidity Support Through Corporate Asset Sale Assistance

Expansion of Support Systems Including New Demand Discovery and Activation of Private Joint Investment
"Goal to Achieve 1 Trillion Won Support in 2021"

[Asia Economy Reporter Park Sun-mi] #.Mid-sized company A, which operates a performance venue, experienced a temporary liquidity crisis due to COVID-19 while implementing a financial restructuring agreement with its main creditor bank. In response, it secured approximately 40 billion KRW in liquidity through the 'Corporate Asset Sale Support Program' and was able to continue operating the performance venue by selling and then leasing back the asset. If the financial situation improves in the future, the company will have the opportunity to repurchase the asset by exercising the right of first refusal.

On the 14th, the Financial Services Commission announced that since July last year, it has been operating the 'Corporate Asset Sale Support Program' through the Korea Asset Management Corporation (KAMCO) and has supported 1.1 trillion KRW by acquiring real estate, ships, and other assets owned by companies facing temporary management difficulties due to COVID-19 and other reasons.

Among these, support through acquisition of corporate-owned real estate amounted to 658.1 billion KRW. Seventeen companies (5 large enterprises, 2 mid-sized companies, and 10 small and medium enterprises) were selected by balancing company size and asset type based on the principles of urgency, effectiveness, and fairness, and 658.1 billion KRW was supported.

Support through acquisition of ships owned by shipping companies amounted to 417.1 billion KRW. After acquiring used ships owned by domestic shipping companies, KAMCO collects charter fees while the shipping companies continue operations using the ships, providing 236.6 billion KRW in support. Considering the difficulty of financial institutions providing funds for new shipbuilding, 180.5 billion KRW was supported through KAMCO’s sole or joint investment within 70% of the new shipbuilding price.

The Financial Services Commission plans to supply 1 trillion KRW in liquidity this year by discovering new demand and activating private joint investments with KAMCO. In preparation for the continued COVID-19 situation in 2021, it intends to appropriately assess companies’ temporary difficulties and potential for recovery and establish a support system accordingly.

First, it will conduct asset sale demand surveys targeting lead sales agents and individual companies, actively grasp market and corporate demand through company-specific visits and interviews, and establish consultation channels with creditors so that companies can easily apply for the program when preparing self-rescue plans if there is demand for asset sales.

Additionally, for the S&LB method favored by many small and mid-sized companies, it will examine the possibility of institutional improvements such as shortening the review period for asset acquisition to maintain a balanced support system with large enterprises. Furthermore, it plans to intensively promote private joint investment (LP participation) to strengthen KAMCO’s complementary role in the market.

A Financial Services Commission official stated, "To support future corporate asset sale demand and market-centered restructuring, we will strengthen linkages with other programs such as the Corporate Structural Innovation Fund, acquisition of facility assets through KAMCO, and package-type rehabilitation support programs (DIP financing), and operate so that companies can receive sufficient support at the desired time and in the desired form."

This content was produced with the assistance of AI translation services.