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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Worswick who wrote (7659)	12/5/1998 11:04:00 PM
From: Michael Sphar	Respond to of 9980

You know its bad when the only surviving capitalists left are the Socialists. More of the same, only this time, socialized capitalists working out their next five-year plan: Saturday December 5, 9:49 pm Eastern Time S.Korea's Kim to meet chaebol heads on reforms By Kim Myong-hwan SEOUL, Dec 6 (Reuters) - South Korea's top five business conglomerates will meet President Kim Dae-jung on Monday to nail down the so-called ''big deals'' that have come to be viewed as crucial to the country's reform and restructuring drive. The biggest deal of them all could see second-ranked Samsung Group [SAGR.CN] swap its infant car business for third-ranked Daewoo Group's [DWGR.CN] electronics company, although both groups have denied that. ''A range of topics would be dealt with in the gathering, including the future of the troubled Samsung Motors Inc,'' said a presidential spokesman. Local media reported on Saturday that the government and chaebol executives had agreed to reduce the top business group units by 40 to 70 percent through absorption, sales or closures. Yonhap News Agency said in an unattributed report, economic ministers including Finance Minister Lee Kyu-sung reported the details of the agreement to Kim during a meeting on Saturday. Presidential Blue House officials declined to comment. Senior executives in charge of restructuring in the chaebol met on Friday to fine-tune the plans before their bosses see the President. ''We understand the government wants to see completed master plans for corporate restructuring this time,'' said Lee Byung-woong, corporate policy chief for the Federation of Korean Industries, the chaebol's business association. ''The heads of the five chaebol will be able to satisfy the government's expectations,'' he said. The big deals are aimed at getting the highly leveraged and highly diversified chaebol to concentrate on core areas. The top three are all in the automotive, electronics, shipbuilding, construction and financial services industries, among others. The chaebol's free-wheeling expansionism, fed by an orgy of debt, was blamed for the financial crisis that forced Seoul to turn to the International Monetary Fund for a humiliating $58.35 billion bail-out a year ago. The government has grown impatient with the snail's pace of chaebol restructuring since then. On Wednesday, a senior secretary to President Kim said the government would get tough with the chaebol that are slow to reform, including denying them credit. ''If necessary, the government will take special measures against chaebol which are lagging behind in their restructuring efforts,'' Kim Tae-dong, chief secretary to President for policy and planning told foreign correspondents. The five chaebol have promised to reduce their debt-to-equity ratio below 200 percent by the end of 1999 from over 400 percent at the end of 1997 and clear up all cross debt payment guarantees among subsidiaries by March 2000. Analysts said a decision to hand over unlisted Samsung Motors to Daewoo could come on Monday. The government and creditors have suggested such a plan is in the works, despite denials from the two groups. ''Early settlement of (an issue regarding the fate of) Samsung Motors will be symbolic,'' said Hwang Chan, an analyst at Dongwon Economic Research Institute. ''It will be good to everybody.'' The deal would see Samsung Electronics , the country's biggest electronics company, absorb Daewoo Electronics. Samsung may later spin off the business to focus on semiconductors, some analysts said. Samsung is the world's largest producer of memory chips. Samsung has been expected to get out of the car business after losing a bid to take over insolvent Kia Motors . It only just started up its 100,000-vehicle capacity plant nine months ago. Samsung's move into the car business was ill-timed, coinciding with a steep slump in domestic car demand and deepening overcapacity in the global market. Another deal may see LG Semiconductor and Hyundai Electronics merging under LG's control. The deal has been hung up on the inability of the two to agree on management control. The deals could leave two companies in the car business -- Daewoo and Hyundai -- with LG and Samsung the lone competitors in the electronics sector.