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[Alpha Biz=(Chicago) Reporter Kim Jisun] NICE Investors Service raised the possibility that GS Engineering & Construction will have difficulty refinancing real estate project financing (PF). This is due to the aftermath of the collapse of an underground parking lot in an apartment building in Geomdan New Town, Incheon.
"When we look at similar cases in the past, investor sentiment for the company could weaken due to falling credibility and prospects for negative administrative disposition by the Seoul Metropolitan Government," NICE Investors Service said in a report published on the 6th. "In this case, it could lead to difficulties in refinancing real estate PFs, which could lead to the company's financial burden."
According to NICE Investors Service, GS Engineering & Construction's payment guarantee related to the housing business is about 2.9018 trillion won. The amount due this year is 1.2839 trillion won.
"The effects of full-scale reconstruction decisions include additional construction costs, damages for buyers, and negative effects in terms of business due to administrative disposal," NICE Investors Service said. "In the long run, the decline in the reputation of the company's housing brand 'Xi' could weaken order competitiveness."
In addition to the apartment accident in the new town of Geomdan, NICE Investors Service was also concerned about the repercussions of the GS Construction's on-site inspection by the Ministry of Land, Infrastructure and Transport. Earlier, GS E&C decided to inspect its own 83 construction sites, but the Ministry of Land, Infrastructure and Transport is reviewing the appropriateness of the safety inspection, saying the results of the self-inspection cannot be trusted.
The results are expected to come out sometime in August.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
