Financial Authorities Lower Threshold for Draft Fund and Support Corporate Asset Sales (Comprehensive)

Extension of Draft Fund Application Deadline and Review of Relaxed Application Requirements
Outline Expected as Early as Beginning of Next Month

[Asia Economy Reporter Park Sun-mi] Financial authorities are considering extending the application deadline for the Industrial Stabilization Fund and easing the application requirements. They plan to supply 1 trillion won in liquidity through the Corporate Asset Sale Support Program.

According to the government and financial authorities on the 15th, the Financial Services Commission has decided to extend the application deadline for the Industrial Stabilization Fund, which was set to expire at the end of April this year, and has begun discussions on easing the application requirements as well. Since agreements with related ministries must be completed and approval from the review committee obtained before the fund application expiration date, a rough outline is expected to be finalized as early as the beginning of next month.

A senior official from the Financial Services Commission said, "Since government policies are generally set and implemented on a one-year basis, it is likely that the application deadline for the Industrial Stabilization Fund will be extended by at least one year," adding, "We are also looking into ways to allow more companies to apply for the fund along with the extension of the application deadline." Do Gyu-sang, Vice Chairman of the Financial Services Commission, also stated at the previously held '36th Financial Risk Response Meeting' that "We plan to review extending the application deadline for the Industrial Stabilization Fund, which is set to expire at the end of April, and explore ways the fund can help companies rebound after COVID-19."

Industrial Stabilization Fund launched with 40 trillion won scale... Support amounts to only 614 billion won

There is a growing consensus that the Industrial Stabilization Fund should be utilized more effectively to provide substantial help for companies to rebound after COVID-19, increasing the likelihood that the eligibility criteria for supported companies will be lowered.

The Industrial Stabilization Fund was launched in May last year with a scale of 40 trillion won, but so far, it has only supported Asiana Airlines and Jeju Air with 300 billion won and 32.1 billion won respectively, and 282.1 billion won to period industry partner companies, totaling support of 614 billion won. The fund’s application conditions?requiring all three criteria of total borrowings exceeding 500 billion won, more than 300 employees, and being affected by COVID-19?have been criticized for limiting utilization to about 1.5%.

An official said, "Rather than expanding the nine supported industries?aviation, shipping, automobile, shipbuilding, machinery, steel, refining, aircraft manufacturing, petrochemicals?or lowering the existing eligibility criteria for supported companies, we are considering maintaining the current conditions but adding additional requirements for support." They added, "The basic principle that the Industrial Stabilization Fund supports companies experiencing temporary difficulties due to COVID-19 will be upheld."

However, the Ministry of Trade, Industry and Energy is reportedly suggesting during a series of consultations with financial authorities that instead of operating the Industrial Stabilization Fund tightly, it would be necessary to consider expanding supported industries to allow broader support if there is demand.

Meanwhile, the Financial Services Commission plans to actively utilize the 'Corporate Asset Sale Support Program,' operated by Korea Asset Management Corporation (KAMCO) since July last year, again this year. Through this program, KAMCO has acquired real estate, ships, and other assets owned by companies experiencing temporary management difficulties due to COVID-19 and other reasons, providing 1.1 trillion won in support.

A Financial Services Commission official said, "Going forward, to support corporate asset sales demand and market-centered restructuring, we will strengthen linkages with other programs such as the Corporate Restructuring 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.