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THE INVESTOR

Industrials

Gov’t to prune investment in underperforming firms

  • PUBLISHED :January 12, 2017 - 10:28
  • UPDATED :January 12, 2017 - 10:28
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[THE INVESTOR] The government will pull out of 10 percent of firms it has invested in within this year that repeatedly underperform, official said on Jan. 12.

There will be a sweeping review starting in April of all companies invested in by public entities under the Ministry of Trade, Industry and Energy, and the decision on which ones will be ousted will be made around June, ministry officials said after a meeting in Seoul among the head of the public firms.

The ministry has 39 public institutions under its wing, with 28 of them having invested in 282 companies.

Firms that registered losses or had debt-equity ratios of over 200 percent for three straight years, and those with debt coverage ratios of under 1 are subject to being ousted, according to the officials. Companies localized overseas can be given extra time depending on the terms of contract and host country‘s laws.

“We will guarantee independent monitoring and management of invested companies under the responsibilities of public entities,” the ministry said, “but we will encourage the active closure of companies that show chronic poor performances.”

(theinvestor@heraldcorp.com)
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