Samsung Motors Files for Court Receivership, Unveils Plan to Retire Debt

1 July 1999

Samsung Motors Files for Court Receivership, Unveils Plan to Retire Debt

    SEOUL, Korea--June 30, 1999--Samsung today announced that the company has filed for court receivership of Samsung Motors to expedite disposal of the automobile unit. Samsung also unveiled plans to retire Samsung Motors' W4.3 trillion (US$3.7 billion) debt, primarily with a W2.8 trillion (US$2.3 billion) contribution from Samsung Chairman Kun-Hee Lee's personal assets. The disposal of Samsung Motors is part of Samsung's plan to focus on core business areas of electronics and finance and strengthen overall Korean enterprise.
    "Samsung is committed to doing what is in the best interest of the national economy at this time: settle the matter of Samsung Motors with transparency and honor," said Dae-Won Lee, vice chairman of Samsung Motors, at a press conference in Seoul this morning.
    Chairman Lee will contribute four million shares he owns in unlisted Samsung Life Insurance Co., a 20 percent stake worth W2.8 trillion. Samsung will retire remaining debt with W1.2 trillion divided among affiliates and the company's value of between W1 trillion and W1.5 trillion. Debt burdens shared by Samsung affiliates will not be passed on to domestic and foreign shareholders.
    Vice chairman Lee added, "Chairman Lee's actions mark a transition point in Korea's economic development. His steps will greatly affect managerial values of Korean conglomerates and help to raise the transparency of Korean companies and financial institutions."
    Samsung plans to stimulate the local economy of Pusan, former production site for Samsung Motors, by attracting subcontracted electronics parts makers into the area.
    Talks between the Samsung and Daewoo Groups had stalled after six months of negotiating the government's "big deal" swap of Samsung Motors for Daewoo Electronics. Samsung has taken decisive and immediate action to settle the matter of Samsung Motors by applying for court receivership.
    Samsung, a leading electronics and financial services company, employs approximately 260,000 people worldwide and had 1997 sales of US$96.1 billion. Headquartered in Korea, Samsung operates more than 390 overseas facilities in 63 different countries.