The South Korean government has selected four additional companies as beneficiaries of a new law called One-Shot Act designed to help companies conduct business restructuring on their own through supports from the government. With the addition of four more companies, industry-wide voluntary streamlining especially in the country’s overcapacity sectors is expected to speed up.

The Ministry of Trade, Industry and Energy (MOTIE) announced Wednesday that four more firms including Histeel Co., Leejin Co., Bokwang Co. and Shinsung Solar Energy Co. gained government approval for their proposed corporate restructuring plans. Last month, the government chose three firms - Hanwha Chemical Co., Unid Co. and Tong Yang Moolsan Co. to benefit from the law that had come into effect on August 13.

The new law, dubbed as the One-Shot Act, aims to help companies realign businesses through a wide ranging government support such as fast-track administrative procedures, exemptions from regulations, and tax benefits.

Histeel became the first steel making company that has received approval on its restructuring plans after the government announced measures to revive the nation’s struggling steel industry on September 30. The company specializes in making steel pipes that account for 6 percent of the total domestic production, and its sales from steel pipe making amounted to 130 billion won ($115 million) last year.

Steel pipe industry facing an oversupply issue is in dire need of scale-down. In the application, Histeel suggested that it will sell one of two lines at its Incheon second factory producing electric resistance welding (ERW) pipes and move the other line to Incheon first factory. It also plans to branch out to manufacturing 10-inch arc welding pipes expected to rise in demand in the future through new facility investment and research and development.

Leejin, the first shipbuilding equipment manufacturer that got the nod on its business reshaping plan under the law, proposed it will sell buildings and land of its Songjeong factory in Busan and relocate the facility to Mieum plant. It also plans to make new investment in power generation equipment in Mieum plant. If the restructuring goes smoothly as expected, it would be able to normalize its business and start manufacturing high-value added products.

A textile manufacturer Bokwang will merge its subsidiary Eco Frontex Co., dispose of some facilities, and establish a special fiber manufacturing facility. The textile industry estimated that the industry as a whole would be scaled down by 2,160 tons in output capacity through Bokwang’s reorganization.

A photovoltaic firm Shinsung Solar Energy plans to merge two subsidiaries and tap into the more lucrative and promising solar cell, smart factory and smart grid businesses. It expects the business reform would address oversupply in the local market and help boost its competitiveness in the global market.

Among the seven one-shot act beneficiaries, two are large-sized companies, three are mid-sized and two are small-sized. Four companies suggested asset sales and three proposed mergers and acquisitions for their restructuring.

By Ko Jae-man

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