Concerns about possible bankruptcies among small and medium-sized local builders are escalating after Ssangyong Engineering & Construction reportedly decided to seek a debt workout plan this week.
News reports said the nation’s 13th-largest builder Ssangyong E&C, which has suffered from the market’s long slump and a resulting liquidity shortage, will request the measure to avoid a bankruptcy.
The list of financially troubled companies includes mid-sized firms such as Hanil Engineering & Construction, Doosan Engineering & Construction, and Keangnam Enterprise Ltd.
Ssangyong E&C, which saw a net loss of 400 billion won ($368 million) last year, is to improve its capital base by the end of March in order to avoid stock market delisting.
Hanil, likewise, posted a net loss of 298.8 billion won last year and recorded capital impairment, meaning that it would be unable to pay off its debt even if it sells off all of its assets.
Doosan Group recently decided to boost capital for its money-losing construction subsidiary, Doosan E&C, by issuing new stocks worth a total 450 billion won. The No. 10 builder dented its corporate-parent’s net profit by 94.4 percent in 2012.
Keangnam, one of the few construction firms which had a surplus up to 2011, also fell into the red last year with a net loss of 24.3 billion won.
Outlooks are not much brighter for larger companies, which set their eyes upon large-scale overseas projects.
The top seven, including Hyundai Engineering & Construction and other runners-up, boosted their total sales by 15.07 percent last year, but their business profits and net profits fell by 7.98 percent and 7.57 percent, respectively.
