44% of Shipping and 35% of Construction Companies in Korea in Danger of Possible Insolvency, Says AlixPartners Analysis

SEOUL, Korea, March 28, 2013 (GLOBE NEWSWIRE) -- On the heels of a recent Moody's report lowering Korea's GDP growth projections for this year from 3.5% to 3.0%, AlixPartners Vice Chairman Al Koch, the man who headed up the restructuring of General Motors for the firm, unveiled an AlixPartners analysis here today citing that 44% of shipping companies and 35% of construction companies in Korea are in danger of possible insolvency, absent aggressive preventive measures.

Other industries facing the greatest danger, according to the analysis of about 1,400 listed Korean companies, are telecommunications and high tech (with 18% of companies studied "on alert" for distress), industrials (16%), metals (14%), consumer products and retail (13%), automotive (13%), life sciences (11%) and chemicals (10%). In all, the AlixPartners analysis finds that 17% of Korean industry is in the "on-alert" zone for distress, with another 45% in the "on-watch" zone.

Said Koch: "Korea and Korean industry today face many of the same problems that General Motors faced prior to its turnaround – high debt, slow growth and seemingly intractable long-term structural issues, some of them culturally oriented. However, just as GM, working in concert with the U.S. government, was able to reexamine past orthodoxies as part of its turnaround, I'm confident that Korea and Korean companies can reexamine their own past orthodoxies to do the same."

While Korea has long had bankruptcy and other restructuring rules on the books, many experts believe that ingrained business norms in the country, including the reluctance to take decisive actions in struggling companies, have led to the creation of zombie companies – and, in aggregate, to a self-perpetuating weakening of the Korean economy.

AlixPartners' head of Asia, CV Ramachandran, said, "It's very telling that in addition to the 17% of companies in our analysis rated as 'on alert' for distress, another 45% are rated as 'on watch,' leaving only 37% of the Korean companies in the 'healthy' zone. Obviously, these are challenging times for all types of Korean companies, and one of the biggest issues companies should be worrying about is cash flow. That's always a number-one issue in times like these."

Yung Chung, managing director at AlixPartners and head of the firm's operations in South Korea, said, "In today's environment, Korean companies hoping for renewal only by cutting costs and headcounts, expecting to solve all their financial problems with just that, are merely pacing zombie-hood or even a slow death. Companies need to simultaneously undertake operational as well as financial actions, a holistic approach, to survive and prosper today."

Koch, who is based in the U.S., was in Seoul to speak at the 2013 Asian Leadership Conference, a gathering of world-renowned statesmen, scholars and businesspeople from all across the globe, attended by more than 150 distinguished speakers and more than 1,000 guests.

About AlixPartners

AlixPartners is a global business advisory firm offering comprehensive services in four major areas: enterprise improvement, turnaround and restructuring, financial advisory services and information management services. Founded in 1981, the firm has offices around the world, and can be found on the Web at www.alixpartners.com.

CONTACT: Tim Yost (U.S.) + tyost@alixpartners.com Florence Huang (Korea) +852.2236.3545 fhuang@alixpartners.com

Source: AlixPartners