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Journalism of Courage
SEOUL, JULY 17: South Korea’s Daewoo Group plans to shrink its empire, selling or spinning off assets in the most radical reform step ever taken by one of the country’s indebted conglomerates, local media said on Saturday."The management situation is getting very serious in Daewoo. As far as I know, Daewoo is planning to announce a strong restructuring plan," the Maeil business newspaper quoted an unnamed senior government official as saying. It and other newspapers, the Yonhap News Agency and YTN cable television reported that the nation’s third-largest group plans to sell off or spin off all but three to four affiliates. The reports all quoted senior Daewoo and government officials, but none was available for comment on Saturday.
The reports said the group, whose 41 affiliates made a combined net loss of 55.4 billion ($46.8 million) on total sales of 61.72 trillion won in 1998, faced tightening liquidity. The Maeil said it would retain only car-maker Daewoo Motor Co, trading and construction firm DaewooCorp and shipbuilding and heavy machinery firm Daewoo Heavy Industries Co.
The group has said it cut the number of affiliates to 23 by the end of June and would slash that number to nine by year-end. If confirmed, the plan would be the most drastic ever reform announced by any of the country’s highly leveraged chaebol – family-run business conglomerates engaged in a wide range of business lines, including some that are far from profitable. President Kim Dae-jung’s government, under support and guidance from the IMF, has told each of the top chaebol to streamline operations and refocus them on core sectors.
