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Ssangyong builder turns to overseas sales for rescue

By Bae Hyun-jung

Driven into a corner by the protracted slump in the local housing market, the nation’s No. 13 builder Ssangyong Construction & Engineering is struggling to survive while anticipating a boom in the overseas high-end construction market.

Ssangyong E&C’s net loss last year was around 400 billion won ($369 million), snowballing from a 157 billion won net loss in 2011, according to officials on Thursday.

The builder, nevertheless, hopes to make up for the losses in the high-potential overseas market.

“It is crucial to understand that the ongoing financial crisis is due to domestic causes, such as shareholder-creditor conflicts and the housing slump here,” said a Ssangyong official.

Korea’s housing sales and contracts have been unprecedentedly sluggish for years, especially since the 2008 global financial crisis.

“When it comes to overseas projects, however, our focus has been on high-value-added buildings and infrastructure deals in emerging markets,” the official said.

“Our construction capacity and financial structure in the corresponding field have not been affected by domestic disputes.”

Ssangyong E&C achieved a total profit of 184.3 billion won in overseas markets over the past three years, despite the dramatic fall in local sales. One of its representative achievements is the completion of Singapore’s landmark Marina Bay Sands Hotel in 2010.

The company is also currently carrying out 17 construction projects worth a total $2.6 billion in eight countries including Singapore and other Southeast Asian states.

Including other deals which are not yet on the table, the amount is expected to soar further within the year, according to officials.

The key stumbling block for the builder is the years-long absence of an owner, along with the feuds between its creditors and state-affiliated shareholder, the Korea Asset Management Corporation.

Ssangyong E&C has been put on sale repeatedly since 2007 yet remains to this day without a new owner.

Faced with the dead-end and the recent financial crises, the firm’s creditors demanded that KAMCO cooperate in a debt-for-equity swap and a subsequent revival process.

The state-owned organization, however, has been passive over the suggestion, gesturing to return its stocks to the government and step out of the Ssangyong business.

“Once KAMCO renounces its share, the conversion will eventually take place and the management be normalized once again,” the official said.

Also, financial authorities are taking back-up measures in an effort to prevent the construction economy from further depression, he added.

“Should Ssangyong E&C falter in the overseas market, the results may also inflict negative effects on the country’s credit level in the international society,” the official said.

(tellme@heraldcorp.com)