Hyundai Construction to get fresh capital injection of 200 bil. won

In a bid to end an ongoing financial crunch, Hyundai Engineering & Construction Co. (HEC) hopes to obtain 200 to 400 billion won in fresh loans by offering proceeds from apartment sales as collateral.

The company, which is also scheduled to benefit from Korea Development Bank (KDB)`s plan to acquire corporate bonds of nonviable firms, aims to overcome its current liquidity crisis through these measures, officials said.

Lee Sung-Roe, director of the corporate credit supervising bureau of the Financial Supervisory Service (FSS), said Friday that construction companies are now able to obtain loans from banks by offering the proceeds from apartment sales as collateral. He said HEC would try to obtain loans of 200 to 400 billion won, including 150 billion won from H&CB. In return for loans, construction companies are required to present bank information for their apartment sales to financial institutions, which will collect payments directly from buyers.

Meanwhile, Chung Ki-Hong, vice chairman of the FSS, said that the liquidity crisis at HEC will be over with the new loans and the KDB`s acquisition of corporate bonds and that the company will soon announce its full recovery from the crisis.

The lending system using apartment sales proceeds as security was introduced last year and Korea Industrial Development already drew loans worth 20 billion won.

Lee Hoon dreamland@donga.com