South Korea's Kohap to Be Split

24 December 2001 00:00  [Source: ICB Americas]

The petrochemicals firm Kohap Corp. of South Korea will be split into two companies, KP Chemical Corp. and Kohap Corp., as part of its creditors' efforts to sell or reorganize the company's businesses and restructure its $2.4 billion debt. The move is scheduled to take place December 28.

As of press time, there was no word which of the company's assets would be transferred to the new companies. Sources speculate that Kohap's creditors may be trying to spin off some its petrochemicals assets--other than its fibers and nylon assets--into a separate company in order to facilitate its sale. Creditors obtained a business license to set up the new company, K P Chemical, from the South Korean government on December 17.

So far, YoungAn, a South Korean specialty vehicle manufacturer and hat-maker, is the only identified investor interested in acquiring Kohap's petrochemicals business with a bid of $310 million. Kohap's 45 creditors are talking with YoungAn to accomplish the sale. The assets in question include three purified terephthalic acid plants with a combined capacity of 1.5 million tons per year, two paraxylene plants with a combined capacity of 700,000 tons per year, one 100,000-ton-per-year benzene plant, and five bottle-grade polyethylene terephthalate lines with a combined capacity of nearly 200,000 tons per year. All of these facilities are located in Ulsan, South Korea.

Kohap's workers staged a dramatic strike from June 12 to August 10 this year to protest the transfer of the company's fibers assets to China. Now, the workers face the creditors' decision that there is no recourse other than laying off 60 percent of the company's 1,800 employees.

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