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To: Tony Rome who wrote (2886)	8/18/1999 5:02:00 PM
From: swoboda4	Read Replies (1) \| Respond to of 3501

NY TIMES August 18, 1999 The Dismemberment of Daewoo or most of the past 40 years the South Korean economy has been dominated by the chaebols, a handful of conglomerates with political connections that gave them access to cheap capital. Many of them expanded willy-nilly into new industries, seeking growth and assuming that profits would eventually follow. The chaebols succeeded in growing very large, but they did so with relatively little equity and a lot of debt. They seem to have assumed that if things went wrong, the Korean Government would bail them out. That was probably true in the past, but now it is not. Daewoo, one of the largest of the chaebols, is being forced to sell off most of its subsidiaries to pay debt. It is encouraging that the Government of Kim Dae Jung did not come to the rescue of Daewoo, although the failure will cost the Government plenty as it bails out some of the banks and other domestic companies that lent to Daewoo. Daewoo employs 150,000 workers, and accounts for about 5 percent of the country's economy. Some of those workers are going to lose jobs, and Korea's recovery from last year's financial crisis may be set back. But the alternative of propping up the company would only have delayed the pain. As Daewoo is broken up, it is virtually certain that the company's assets will prove to be worth less than the huge debt -- estimated at around $50 billion -- that it has built up. That means losses for creditors, and it is important that those losses be fairly shared. So far, however, foreign creditors have been largely kept in the dark while domestic creditors -- many of them controlled by the Government -- have seemed to have better information and more influence. Korea's reputation will be hurt if the process of dismembering Daewoo is not a fair one to all creditors.