A third of companies unable to pay interest on debts


Despite aggressive corporate restructuring efforts since the financial crisis, nearly three in 10 domestic firms were still unable to pay interest in 2003, the Korea Development Institute (KDI) has said this week.

The state-run economic think tank noted export-oriented firms and high technology-based companies had a greater interest burden than domestic demand-oriented businesses.

In a report published June 27, KDI said that out of about 10,000 local companies surveyed last year, 2,679 firms, or 27.5 percent, had an interest coverage ratio of less than 1 while 572 companies, or 5.9 percent, posted a ratio below 1 for the past three consecutive years.

“About 6 percent of businesses have a very high possibility of becoming delinquent or falling into the supervised issue category. If troubled companies have little chance of being revitalized, it is better to force them out of the market rather than trying to extend financial support,” the KDI said.



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