Financial Services Commission to Provide 1 Trillion Won Support to Companies Pursuing Business Restructuring

Establishing a Fund for 220 Billion KRW Investment
Providing Over 700 Billion KRW Financial Support Through Dedicated Loan and Guarantee Products

[Asia Economy Reporter Song Hwajeong] The Financial Services Commission will provide approximately 1 trillion KRW in support to companies pursuing business restructuring.

On the 3rd, the Financial Services Commission announced that it will strengthen support programs and provide financial assistance worth about 1 trillion KRW to enable companies to pursue business restructuring.

To this end, a fund targeting business restructuring companies as the primary investment focus will be newly established to support investments worth 220 billion KRW. The 'Business Restructuring Innovation Fund' (75 billion KRW), led by the Korea Institute for Advancement of Technology (KIAT), plans to invest at least 30% in approved business restructuring companies and at least 60% in companies pursuing business restructuring. The 'Business Restructuring Fund' (145 billion KRW), led by Industrial Bank of Korea, plans to invest at least 50% in companies pursuing business restructuring and others.

Additionally, more than 700 billion KRW in financial support will be provided through dedicated loan and guarantee products based on preferential interest rates. The Korea Development Bank will offer up to a 1.0 percentage point interest rate reduction to approved business restructuring companies through the 'Business Competitiveness Enhancement Support Fund' (500 billion KRW). The Korea Credit Guarantee Fund will provide preferential treatment in guarantee ratios, fees, and limits to approved and pursuing business restructuring companies through the 'Business Restructuring Guarantee' (100 billion KRW). Furthermore, the Korea Credit Guarantee Fund will support the issuance of corporate bonds worth 100 billion KRW for approved business restructuring companies through the 'Business Restructuring Company P-CBO.' Liquidity of about 100 billion KRW will also be supplied by selling assets held by approved business restructuring companies to KAMCO and then leasing them back.

Until now, differences between the Ministry of Trade, Industry and Energy's business restructuring approval criteria and financial institutions' screening standards have made it difficult to link financial support to approved business restructuring companies. However, the Financial Services Commission plans to strengthen pre-selection to ensure that companies eligible for financial support can be selected as business restructuring companies. First, the Business Restructuring Comprehensive Support Center will assess the financial status of companies applying for business restructuring and determine whether there are any disqualifying factors. Companies passing the disqualification review will then be evaluated for technological performance and business feasibility by a Technology Credit Evaluation (TCB) agency.

The Financial Services Commission plans to introduce disqualification screening and TCB evaluation for companies selected from September and continue supporting companies pursuing business restructuring. A Financial Services Commission official stated, "Considering the decline in corporate productivity, it is a timely moment for proactive corporate restructuring to enhance the competitiveness of our companies," adding, "Policy finance will focus on large-scale, long-term, and high-risk areas to support business restructuring activities."

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