SK Global wins debt reprieve

SEOUL, March 19 (Reuters) -- Creditors of South Korea's SK Global Co have thrown a lifeline to the troubled trading company by agreeing to freeze repayment on $5.4 billion of its debt for the next three months.

At a meeting of 56 creditor banks and financial institutions on Wednesday, the creditors also decided to get directly involved in the day-to-day running of SK Global, the trading arm of the SK Group, the country's fourth-largest conglomerate.

The move would save SK Global from defaulting on its maturing loans and allow it to focus on raising cash by selling off assets and cost cutting.

SK Global is at the center of a $1.2 billion accounting fraud that rocked the country last week. Authorities have focused on containing the fallout from the corporate scandal, one of the biggest since the failure of Daewoo Group in the late 1990s.

The scandal revived memories of the 1997 financial crisis, sending shivers through financial markets already stricken with concerns over North Korea's nuclear ambitions and an imminent war threat in Iraq.

Hana Bank, the main creditor, said the lenders had decided on a three-month suspension on the repayment of 6.7 trillion won ($5.4 billion) that SK Global owed to domestic financial institutions and local branches of overseas banks. Interest would be paid as usual during the freeze.

It also said the creditors would pick a financial adviser to determine the viability of the firm.

Other creditors to SK Global include state-run Korea Development Bank, Shinhan Bank and Kookmin Bank.

SK Global said on Wednesday it planned to raise one trillion won through the sale of fixed assets, including petrol stations, and 500 billion won by selling securities. It also hopes to cut costs by 60 billion won.

Despite the lenders' commitment to support the ailing company, Hana said it planned no fresh loans to SK Global.

"Under the current situation we cannot provide further fresh loans to SK Global," Yoon Kyo-joong, senior deputy president of Hana Bank, told Reuters.

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