SK Global Co's foreign creditors said they don't want the company, at the center of South Korea's biggest financial scandal in four years, to be put into court receivership and want to discuss a rescue plan with local lenders.
SK Global, which has 4.4 trillion won (US$3.7 billion) more of debt than it has assets, sparked a decline in South Korean debt and stock markets when it admitted in March to overstating earnings and hiding debt. Fifty-six Korean creditors, owed 6.7 trillion won by SK Global, will meet on July 24 to vote on whether to place the company into receivership.
"We have indicated our willingness to do so and remain optimistic that a deal can be struck with the domestic creditors," Guy Isherwood, the chief representative of a steering committee of SK Global's foreign creditors and an official at Standard Chartered Plc, said in a statement. Korean and foreign creditors should "sit down and thrash out a rescue plan."
Hana Bank and other domestic lenders are haggling with Standard Chartered Plc and other overseas banks over a buyout of the company's debt and how much of their credits they will get back. Foreign banks risk losing more money if they don't reach a compromise, a Hana spokesman said.
Negotiations broke down Friday when local banks said they would not improve their offer of 43 percent of face value and would instead push the trading arm of South Korea's fourth-biggest industrial group closer to receivership. Overseas lenders want 72 percent of their credits returned.
Korean creditors will propose a new debt rescheduling proposal to the court, which will allow debt holders opposing the plan a buy out of their loans at 28 percent of face value, Hana spokesman Kang Young Jin said. The maximum amount of SK Global debt covered under this clause will be 1.7 trillion won.
"There are only two options: one is to take the offer or reject it," Kang said.
SK Global shares fell 6 percent on Friday to 1,395 won.
Even if lenders can agree, SK Global's rescue still faces opposition. Sovereign Asset Management Ltd, a Monaco-based fund that's the largest shareholder of SK Corp, in turn the biggest shareholder of SK Global, reiterated its opposition to the bailout and called for the liquidation of the company.
"Given SK Global's lack of viability, any attempt at a re-packaged court receivership will also ultimately fail," Sovereign said in a release sent through its local representative, Access Communications & Consulting.
"Salvaging a company with falsified accounts, where management lacks legitimacy and where the creditors were reckless in their lending practices will only continue past abuses and is beyond credibility in a mature financial market."
Management at SK Corp, South Korea's biggest oil refiner, said they will continue with their rescue plan regardless of whether the company is put in receivership. The plan involves swapping 850 billion won of debt into SK Global stock.
Kang at Hana said 56 Korean creditors will meet on July 24 as planned to vote on a filing for receivership should overseas creditors reject the offer.