Taeil and Newmax brush with bankcruptcy

Taeil and Newmax brush with bankcruptcy

SEOUL (AFP): South Korea's largest computer parts maker, Taeil
Media Co. Ltd., and its subsidiary, Newmax Co. Ltd., brushed with
bankruptcy yesterday before being granted a grace period for debt
repayment, banks said.

The two companies were placed under a protection agreement
among creditors to give them breathing space and more time to
seek ways out of their current cash flow problems, said their
main creditor, Cho Hung Bank.

"Taeil was put under the pact as it faced cash flow problems
after making excessive investment in non-manufacturing areas, and
after a sudden collection of loans by non-banking institutions,"
Cho Hung official Lee Yong-Gun said.

Taeil, which also produces computer parts in China, had been
at the center of rumors about a possible connection with
President Kim Young-Sam's son, who was jailed for three years
this week on tax evasion and influence-peddling charges.

Taeil's owner, Chung Kang-Hwan, was investigated by
prosecutors in May, when the son was jailed for stashing away
illegal money from businessmen in return for favors.

Chung, who opened a small computer parts plant 14 years ago,
has dramatically expanded the scope of his business since the
president took office in 1993. He faced cash-flow troubles
earlier this year after his failed attempt to buy a merchant
bank.

The outstanding debts owed by Taeil and its eight subsidiaries
total US$1.1 billion, bank officials said. Taeil's total sales
last year was estimated at $1.1 billion.

Share prices nosedived 2.6 percent on the Korea Stock Exchange
Wednesday sending the composite index to a five-year-low on
jitters over the near insolvency of Taeil and the underwear and
resort major, Ssangbangwool group.