New List of Chaebol for State Regulation Unveiled

    April 02, 2002 17:02

    A total of 19 business groups whose asset value is more than W5 trillion each, including Korea Electric Power Corp. (KEPCO), Samsung, LG and SK, have been designated as the Korean business conglomerates that will be subject to the government restriction on equity investment.

    In addition, 43 other business groups with more than W2 trillion in asset value have also been chosen as firms that will be prohibited from making cross-subsidiary investments and debt repayment guarantees.

    The Korea Fair Trade Commission (KFTC) unveiled Tuesday the list of business groups that would be regulated in a bid to prevent indiscriminate expansion. The government made the list after it decided last year to monitor the groups based on their asset value, abolishing its decades-old chaebol regulatory system that imposed financial and taxation measures on the top 30 chaebols.

    In detail, the 19 groups whose assets are valued at more than W5 trillion each as of April 1 will not be allowed to make investments over 25 percent of their net worth in other firms.

    The 43 smaller groups will be banned from making cross-subsidiary investments and debt guarantees across the board. The 43 include POSCO, Lotte, Hyosung, and Daelim.

    POSCO and Lotte group's asset values are actually more than W5 trillion each but are not subject to the same equity investment restriction as their financial status is above par, including a healthy debt-to-equity ratio of less than 100 percent.

    A total of 16 groups and companies have been dropped from the list of the top 30 chaebols made in 2001, freeing them from the equity investment cap this year. The 16 include Daelim, Hansol, Tong Yang, Hyosung, Cheiljedang, Kolon, Dongkuk Steel, Hyundai Development, Hanaro Telecom, Shinsegae, Youngpoong, Hyundai Department Store, Dongyang Chemical, Daewoo Electronics, Taegwang Ind. and Kohap.

    According to the new list of top Korean business groups in terms of asset value, state-owned KEPCO ranked ahead of all others, with its total asset value of W91 trillion. State-run corporations have not been made subject to the government restrictions in previous years.

    Samsung followed the state monopoly in the rankings and is followed by LG, SK, and Hyundai Motor group. KT Corp., another state telecommunications giant, and Korea Highway Corp. have been newly listed this year, occupying the sixth and seventh spot, respectively.

    The KFTC also noted that the 19 and 43 groups each recorded 125.1 percent and 122.3 percent in their debt-to-equity ratio.

    (Kim Ki-hun, khkim@chosun.com)
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