Woobang Declares Insolvency

Creditor banks have decided not to loan additional funds to Woobang Corp., one of the large construction firms currently undergoing a workout, which means the firm will have to be placed under court control. The creditors of the Taegu-based construction firm met Monday morning to vote on a proposal to provide W110.7 billion in new loans, but only 54.8% of Woobang¡¯s creditors approved, far short of the 75% vote required to have the proposal go forward. Immediately following the decision, the bank failed to honor a W1.49 billion company check and Woobang had to declare insolvency.

The firm¡¯s largest creditor Seoul Bank disapproved of the plan to provide additional funding, believing that management would not be able to turn the company around, even if the loans were to come through. Creditor banks extended a total of W308.3 billion in new funds to Woobang since it was placed under a workout program in November 1998. Last month, the company requested W155 billion in emergency funding from its creditors.

Woobang will be the first company undergoing a workout to be placed under court control. The company currently has 55 construction projects in progress, including 38 apartment complexes and 17 civil construction projects. About 15,000 apartment units currently under construction will be affected by Woobang¡¯s being placed under court control.

Analysts say a Woobank bankruptcy would have a substantial impact on the economy in the Taegu area.

Woobang chair Lee Soon-mok, who became a member of the ruling Millennium Democratic Party just prior to the 1998 election, where he was voted in as a member of the National Assembly, has been the target of mounting criticism for concentrating on political activities, rather than management of his business.

(Seo Gyo, gyoseo@chosun.com)