When the Korea Land & Housing Corp. was established in 2009 as a result of the merger of the Korea National Housing Corp. and the Korea Land Corp., the public was more concerned than hopeful about the organization’s future.

The integrated land and housing developer was then in a seemingly irretrievable situation, holding 109 trillion won ($97.6 billion) in total debt, which amounted to 525 percent of its total assets.

Things worsened in the following year, when the figure soared to 560 percent, while the local and the global markets continued to struggle amid the shock of the 2009 world financial crisis.

To the surprise of many, however, the state-run company rehabilitated its ailing business in less than three years.

LH recorded 18.4 trillion won in sales and 1.2 trillion won in net profit last year, up by 40 percent and 140 percent respectively from 2010. Its controversial debt ratio, too, fell to 466 percent during the same period.

“The significant improvement was attributable to reasons including the company’s voluntary reconstruction, the parliament’s legislative support and the leadership of former (LH Corp.) president Lee Ji-song,” said an LH official.

Over the past years, LH has carried out a thorough personnel inspection and replaced more than 75 percent of its top-ranking officials with fresh faces. It also shed 1,035 staff by accepting voluntary redundancies.

“One of the biggest concerns of the newly-launched LH, back in 2009, was its bulky volume and oversupply of manpower,” the official said.

“In order to create synergy from the integration of the land and housing sectors, it was crucial to minimize the organization.”

The company also called off or cut budgets on regional development projects that were not lucrative enough, thus saving some 70 trillion won in its budget.

“All business sectors which were not directly related to the land and housing sector, the core function of LH, were eliminated from the portfolio,” the official said.

“We also set a principle that no business action plans are to take place, unless the related financial blueprint is fully set and ready.”

These sets of measures were taken under the lead of Lee Ji-song, who recently stepped down to make way for a new leader under the Park Geun-hye administration.

Before he took the helm at LH, Lee was renowned for leading Hyundai Engineering & Construction out of its fiscal difficulties in 2001.

“Because of its characteristics as a public company, the social and economic status of LH is somewhere between a private firm and the government,” the official explained.

“For this reason, it was crucial that its leader would maintain the delicate balance between various interest groups.”

The former president, throughout the years, was known as a “man of the field,” for his active communication not only with LH officials but also with local residents and government departments.

The government and the parliament, too, played a supportive role by revising the land and housing law, the official added.

“Under the revised law, LH was able to implement a series of public projects such as the construction of Sejong City and the establishment of low-priced apartments,” the official said.

Despite its fast recovery, the public corporation still faces the financial task of lowering its debt ratio further.

Government reports showed earlier this year that public corporations’ debts amounted to 400 trillion won in total and that LH was the most indebted.

This also led to the expectations that the next president would continue Lee’s management legacy and add momentum to the organization. The corresponding position is currently vacant.

“Over the past years, the key point of concern for LH was to normalize its finances at all costs,” the official said.

“From now on, we will also work on recovering our reputation as a public corporation by continuing our management efforts.”

By Bae Hyun-jung (tellme@heraldcorp.com)