Government decides to provide liquidity to companies by purchasing their corporate assets through KAMCO
Chairman and CEO Moon Sung-yu of KAMCO.
“Since we started receiving applications for the Program to Support the Sale of Corporate Assets on July 17, many companies have been applying for the program,” said an official of Korea Asset Management Corp. (KAMCO) in September.
The Program to Support the Sale of Corporate Assets involves a company applying to sell its assets to secure liquidity and improve its financial structure. The application is reviewed in accordance with a procedure.
Then finally, KAMCO takes over the asset. Sometimes, KAMCO and private companies jointly acquire the assets.
The government has decided to provide liquidity to large and small companies by purchasing over two trillion won worth of corporate assets through KAMCO.
The government intends to help companies needing to sell their assets at appropriate prices due to tough business situations sparked by the spread of the new coronavirus crisis.
The Financial Services Commission (FSC) said in June that it approved the Program to Support the Sale of Corporate Assets at the sixth emergency economic meeting presided over by Hong Nam-ki, deputy prime minister for economic affairs and minister of strategy and finance.
“Companies are trying to secure liquidity through asset sales since they have been hit hard by the spread of the COVID-19 pandemic, but they are having difficulty selling their assets,” Hong said during the meeting.
“We will set up a 2 trillion won asset purchase program centered on KAMCO to help companies to sell their assets whose prices are difficult to set in the market.”
The method is to sell assets to special purpose vehicles (SPVs) and KAMCO invests in SPVs with private investors. KAMCO will also seek joint investment with corporate restructuring funds, private equity funds (PEFs) and pension funds.
KAMCO will raise financial resources by issuing 2 trillion won in KAMCO bonds.
After the announcement of the program’s operation on July 15, KAMCO mapped out detailed operation and implementation plans for the smooth operation of the program.
In addition, KAMCO assembled a committee to review and resolve important matters from the selection of support targets to the decision on the acquisition price with outside experts and prepared criteria on selecting companies to be supported in order to secure fairness and objectivity in the support process.
As for assets that have been applied through the website of KAMCO, a practical review is currently underway on whether they conform to the purposes of the program.
In addition, KAMCO will select candidates by considering company and asset types in a balanced manner after deliberation by the “Selection Committee for Support Review” under the basic principles of support such as urgency, effectiveness, and fairness.
Based on the prices calculated through external specialized institutions, acquisition prices will be determined by the Company Asset Sales Support Review Committee will be discussed with companies and will be supported sequentially beginning in the fourth quarter of this year.
“More companies applied for the program than expected,” said KAMCO Chairman and CEO Moon Sung-yu. “We will select target companies to be supported after in-depth discussions by the committee in consideration of the purposes of the program. We will speed up our activities for the purpose of giving support companies in urgent need of support first and at the right time.”
In this regard, KAMCO closed the application for asset sale on August 20 in order to expedite and efficiently handle its business and will resume receiving applications in October while checking the processing status of assets to be sold in application forms that KAMCO already accepted.
However, KAMCO will continue to receive applications for its sale and leaseback (S&LB) for small and medium-sized enterprises which had been run before the operation of the Program to Support the Sale of Corporate Assets regardless of the first deadline.
KAMCO’s Seoul office in Yeoksam-dong, Gangnam-gu. (Photos: KAMCO)