The Mergers & Acquisitions Review: South Korea
Overview of M&A activity
In 2019, M&A activity in Korea comprised some 456 transactions with an aggregate value of US$60 billion. This represented an all-time high in the number of transactions, with total value increased by 13.8 per cent on the previous year. Outbound transactions worth US$17.7 billion in total accounted for 78 out of the total number of transactions, an all-time high. There were 51 inbound transactions worth a total of US$14.6 billion, and 405 domestic transactions worth a total of US$45.5 billion.
There was a dramatic decrease in Korean M&A activity in the first half of 2020, with only 164 completed transactions having a total value of US$14.8 billion, which is a 42.1 per cent decrease from the first half of 2019 (204 transactions worth US$25.6 billion). However, in the second quarter of 2020, there was an 86.7 per cent increase in activity over the first quarter of 2020, as activity began to recover from the impact of the covid-19 pandemic.
There were eight inbound transactions in the first half of 2020, worth a total of US$776 million, a 78.5 per cent decrease from the first half of 2019 (24 transactions worth US$3.6 billion). However, the second quarter of 2020 (US$728 million over six transactions) marked a 15.3 times increase from the first quarter of 2020 (US$48 million with only two transactions). More detailed discussion of foreign direct investment into Korea can be found in Section IV.
There were 28 outbound transactions in the first half of 2020 worth US$3.4 billion, representing a 26.4 per cent decrease from the first half of 2019 (US$4.6 billion over 33 transactions). Domestic M&A activity involving Korean companies in the first half of this year was worth a total of US$14.1 billion with 156 transactions, a 36.1 per cent decrease from the first half of 2019 (US$22 billion with 180 transactions).
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General introduction to the legal framework for M&A
Acquisitions of private companies in Korea are primarily governed by the Korean Commercial Code (KCC), the Financial Investment Services and Capital Markets Act (Capital Markets Act) and the Monopoly Regulation and Fair Trade Act (MRFTA).
The KCC contains the main rules of corporate governance affecting deal structuring, including requirements for, and limits on, mergers, share acquisitions, spin-offs and asset transfers. As such, the KCC will influence the transaction structure, and dictate corporate approval requirements, for both public and private companies. The KCC also governs directors' fiduciary duties, regulations on self-dealing and other corporate conflicts of interest.
The Capital Markets Act applies to public companies listed on the Korea Exchange (KRX), which includes the KOSPI, KOSDAQ and KONEX markets. The Capital Markets Act imposes disclosure requirements and other restrictions on trading in KRX-listed shares. It also prescribes rules for tender offers. Further, M&A deals involving public companies are subject to KRX disclosure rules and scrutiny by the Financial Supervisory Service (FSS), the enforcement arm of the Financial Supervisory Commission (FSC). FSC, through FSS, generally administers the financial, banking and securities system in Korea.
Under the MRFTA, which is the main antitrust statute, acquisitions and other combinations involving companies satisfying certain revenue and assets thresholds will require antitrust review by the Korea Fair Trade Commission (KFTC).
The Foreign Investment Promotion Act and Foreign Exchange Transactions Act govern foreign direct investments and foreign exchange transactions involving foreign investors in Korea. Foreign investments generally require a report to a foreign exchange bank, which is in most cases a formality, and acceptance of the report is usually granted within a few days.
While foreign investors are in general not prohibited from acquiring shares in a Korean company, there are prohibitions or limits on foreign ownership in Korean companies engaging in certain industries considered to be vital to the national interest, such as defence, broadcasting, telecommunications, publishing and public utilities.
Strategies to increase transparency and predictability
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Developments in corporate and takeover law and their impact
On 11 June 2020, the Ministry of Justice announced a proposed amendment to the Korean Commercial Code that aims to improve corporate governance by introducing a multi-level derivative lawsuit system, a separate election for audit committee members, and enhanced rights for minority shareholders, among other changes (the Bill). The Bill was approved by the Cabinet on 25 August 2020, in substantially the same form as the original draft, submitted to the National Assembly on 31 August 2020 and is currently pending review before the Legislation and Judiciary Committee. We recommend that companies closely monitor these developments, as the Bill is generally expected to pass during an upcoming plenary session, subject to certain amendments that may be adopted during the review process. Key features and implications of the Bill are set forth below.
i Introduction of multi-level derivative lawsuits
The amendment creates a cause of action for qualifying shareholders of the parent company against a director of a subsidiary in cases where the director caused harm to the subsidiary by, for example, acting negligently or breaching his or her duties. The threshold requirements for filing a multi-level derivative claim are to be the same as those for existing derivative claims and are as follows: (1) for unlisted companies, any shareholder holding more than 1 per cent of the total number of issued shares, and (2) for listed companies, any shareholder holding more than 1 per cent of the total number of issued shares as well as any shareholder who has continuously held 0.01 per cent of the total number of issued shares during the preceding six-month period.
ii Audit committee: introduction of a separate election and amendment to regulations concerning committee appointments
Introduction of a separate election system
At least one director who will also be a member of the audit committee is to be elected separately from other directors at the time of the general elections for the board of directors, and the '3 per cent cap rule' will apply to this election (i.e., shareholders are not entitled to exercise their voting rights above the 3 per cent threshold).
Amendment to regulations concerning the 3 per cent cap rule for member appointment
For listed companies, the 3 per cent cap rule will apply in a uniform manner to all audit committee member or auditor appointments, and regardless of whether the nominee is an outside director, voting rights are to be exercised only with respect to shares not exceeding 3 per cent. For the largest shareholder, shares held by affiliated persons will be included in this calculation.
iii Relaxation of voting threshold for audit committee member/auditor elections via electronic voting
An audit committee member or auditor may be elected via electronic voting by a resolution passed by a vote of the 'majority of the voting rights present', instead of a quarter of the total number of issued shares. For companies who have difficulty meeting quorum requirements for the election of an audit committee member or auditor due to the 3 per cent cap rule, the electronic voting method is expected to reduce the possibility of the agenda being rejected due to lack of quorum.
iv Amendment to regulations regarding dividend record date
Provisions that require the dividend record date to be the last day of the business year, with regard to the closure of the shareholders register and determination of the record date under Article 354(1) of the Commercial Code, are to be repealed. While the timing of a general meeting of shareholders is not expressly determined under the current Commercial Code, when the dividend record date is set as the last day of the business year, a shareholders meeting must be held by the end of March of the following year (i.e., within three months of the dividend record date). As a result, shareholders' meetings currently tend to be held at the end of March.
v Amendment to requirements on exercise of minority shareholder rights for listed companies
Minority shareholders of listed companies now may choose between either: (1) the general requirements pertaining to minority shareholders' rights (percentage ownership requirement) that apply to all companies, including unlisted companies; or (2) the requirements pertaining to minority shareholders' rights under special provisions relating to listed companies under the Commercial Code (i.e., relaxed percentage ownership requirement and a minimum six-month holding period) in order to exercise their minority shareholder rights.
This amendment aims to strengthen minority shareholder rights and their ability to supervise major shareholders' pursuit of personal interests at the expense of minority shareholders. However, concerns have been raised that it will fuel opportunistic investment behaviour in foreign hedge funds and be abused or overused by minority shareholders particularly by foreign investors making short-term investments. It is necessary to wait and see what changes will be made as the Bill progresses through the legislative process.
For recent amendments to the employment law, tax law and competition law, see Sections VII, VIII and IX, respectively.
Us antitrust enforcement: the year in review
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Foreign involvement in M&A transactions
In 2019, foreign direct investment (FDI) into Korea amounted to a total of US$23.3 billion, a slight decrease from an all-time high FDI in 2018 of US$26.9 billion. However, taking into account that 2018 was an exceptional year in which companies brought forward the timing of FDI reports to 2018 due to the abolition of corporate tax reduction benefits for foreign-invested companies scheduled after 2019, and other factors including the completion of the GM Korea mega-deal (US$3.6 billion in value), FDI in 2019 was still remarkably high, ranking as the second-most prolific year on record (after 2018). FDI into Korea surpassed US$20 billion in each year during the five-year period from 2015 to 2019.
FDI in the first half of 2020 decreased 22.4 per cent (to US$7.66 billion) from the first half of 2019. Korea was also affected by the decline in global FDI due to restrictions on cross-border movement and increased uncertainty caused by the covid-19 pandemic. Nevertheless, the decline is relatively low compared to other countries such as the United States (decreased by 35.5 per cent from US$81.6 billion in the first half of 2019 to US$52.6 billion in the first half of 2020) and Japan (decreased by 80.9 per cent from ¥1,602.3 billion in the first half of 2019 to ¥350.7 billion in the first half of 2020).
Below is a table of FDI values broken down by investor nationality in the full year of 2019 and in the first half of 2020.
|Ranking||Country||Total FDI reported in full year 2019 (US$ million)||Total FDI reported in first half of 2020 (US$ million)|
Significant transactions, key trends and hot industries
i M&A in 2019
The significant transactions announced in the Korean M&A market in 2019 included the following.
|Transaction||Industry||Deal value (US$ million)|
|HDC-Mirae Asset Consortium's acquisition of Asiana Airlines Inc||Aviation||6,665|
|Korea Shipbuilding & Offshore Engineering Co, Ltd's acquisition of Daewoo Shipbuilding & Marine Engineering Co, Ltd||Shipbuilding||4,570|
|Delivery Hero SE's acquisition of Woowa Brothers Corp||Software development||4,015|
|Macquarie Group Limited's acquisition of DaeSung Industrial Gases Co Ltd||Gas supply||2,565|
|HSG Heavy Industries Consortium's acquisition of Sungdong Shipbuilding & Marine Engineering Co Ltd||Shipbuilding||2,236|
|Netmarble Corporation's acquisition of Coway Co, Ltd||Rental services||1,449|
|LG Uplus Corp's acuqisition of LG HelloVision Corp||Broadcasting||1,258|
|Saudi Arabian Oil Co's acquisition of Hyundai Oilbank Co, Ltd||Gas supply||1,213|
|IMM Private Equity, Inc.'s acquisition of LindeKorea Co, Ltd||Industrials and chemicals||1,168|
|MBK Partners-Woori Bank consortium's acquisition of Lotte Card Co, Ltd||Financial services||1,165|
The industry with the most vigorous M&A activity in 2019 was industrials and chemicals, which accounted for 33.7 per cent of total M&A. The industries that grew the most compared to the previous year were the transportation and real estate industries, up 343.8 per cent and 306.8 per cent, respectively. The growth of M&A in the transportation industry was underpinned by the acquisition of Asiana Airlines, which was Korea's largest M&A transaction in 2019. Real estate industry M&A was driven by restructuring within the Lotte Group.
ii M&A in the first half of 2020
The notable significant transactions in the Korean M&A market announced in the first half of 2020 included the following.
|Transaction||Industry||Deal amount (US$ milllion)|
|KB Financial Group Inc's acquisition of Prudential Life Insurance Company of Korea Ltd||Life insurance||1,867|
|Aprogen KIC Inc's acquisition of Aprogen Inc||Pharmaceutical||1,693|
|Pine Tree Partners Co Ltd's acqusition of Dong-A Tanker Co Ltd||Freight transport||532|
|Credian Partners and Alchemist Capital Partners Korea Co Ltd's acquisition of MagnaChip Semiconductor (Foundry Services Group and factory in Cheongju)||Semiconductor||435|
|IMM Private Equity Inc's acquisition of Kolmarpharma Co Ltd (62.1 per cent stake) and Korea Kolmar Co Ltd (Pharmaceutical business)||Pharmaceutical||416|
In the first half of 2020, the industry in which M&A was the most active was the financial services industry with 14 transactions having a total value of US$3.4 billion, accounting for 23.2 per cent of the total deal value. The pharmaceutical, medical and bio industries followed with US$2.5 billion (14 transactions). The Industrial and chemical industry recorded 39 transactions with a total value of US$2.3 billion, a decrease of 78.3 per cent from the first half of 2019. The transportation industry has emerged as the biggest growth sector with total deal value of US$949 million (six transactions), up 5.1 times from the first half of 2019.
Private equity buyouts were reduced to 30 transactions with a total value of US$3.7 billion, a decrease of almost 50 per cent from US$7.4 billion (51 transactions) in the first half of 2019. In the same period, private equity exits have amounted to US$1.2 billion over 14 transactions, which is a 60.9 per cent decrease from the first half of 2019 (US$3.1 billion over 18 transactions).
Meanwhile, deal flow is expected to improve in the second half of 2020 due to ample liquidity and improved investor sentiment following the stock market recovery. Also, the local M&A market is expected to pick up steam as asset sales by cash-strapped Doosan Group and Hanjin Group are expected to materialise in the second half of 2020.
Financing of m&a: main sources and developments
i Leveraged buyouts
Korean statutory law and court precedents prohibit certain forms of leveraged buyout (LBO) as forms of illegal asset-stripping. However, a clear-cut standard on whether a given financing structure is permissible for a given transaction structure has not been established to date.
Based on court precedents, it is generally understood that LBO financing structures that directly utilise the target company's assets as collateral are likely to be prohibited. However, a 2015 Korean Supreme Court judgment ruled that an LBO that involved establishing security on target company assets was allowed considering, among other things, that:
- the buyer acquired 100 per cent of the target company, and as such no minority shareholders were harmed by the transaction;
- a critical portion of the funding for the transaction (approximately 43 per cent) was supplied by the buyer;
- the buyer was not a paper company, but a listed company with substantive assets; and
- there was no substantive or procedural defect in the merger following the acquisition.
While this judgment does not seem to rule that LBO financing structures that utilise a target company's assets as collateral are generally allowed, it can be seen that in certain cases such financing structures are permissible, depending on the entirety of the circumstances.
On the other hand, indirect LBO financing in cases where the acquiring company (which borrowed the purchase price) is merged with the target company, or the target company provides funding to the acquiring vehicle by capital reduction, are likely allowed, assuming that the necessary corporate approvals and procedures are obtained and observed.
Overall, LBO financing is being used more often in the Korean M&A market compared with previous years.
ii Total return swaps
A total return swap (TRS) is an instrument under which the total return payer (who will acquire a partial stake in the target company) agrees to pay the total return recipient the increase in the value of the stake, dividends, or both, derived from the stake; and in exchange, the total return recipient agrees to pay a fixed fee to the total return payer, any decrease in the value of the stake, or both.
Although it is arguable whether a TRS constitutes a true sale, M&A transactions utilising the TRS are being seen more commonly in the Korean M&A market. For the acquisition of KT Rental in 2015, Lotte Group financed approximately US$290 million (out of a total purchase price of US$1.1 billion) using the TRS structure.
i Notable amendments
Nearly four years after revisions to the law were first proposed, the Korean National Assembly passed a bill on 28 February 2018 to amend the Labour Standards Act (LSA) to reduce Korea's maximum weekly working hours. The law reduces the maximum weekly working hours from 68 hours per week to 52. The law became effective on 1 July 2018 with respect of companies with 300 or more employees from 1 July 2018, 1 January 2020 with respect of companies with between 50 and 300 employees and will become effective on 1 July 2021 with respect to companies with between 5 and 50 employees. Thus, companies with 50 or more employees have been required to comply with the law since 1 January 2020, and employers who fail to comply will be subject to criminal penalties of imprisonment (for individuals involved in the contravention) for up to two years or a fine of up to 20 million won. Reviewing the working conditions of target companies for compliance with the mandatory working hour regulations has become a routine part of due diligence.
Also, the law which deems public holidays to be paid holidays became effective as of 1 January 2020 for large companies with 300 or more employees, and will be rolled out in stages to smaller companies. Therefore, employers cannot treat public holidays as days taken by annual leave, which will result in additional liabilities for affected employers as employees will need to be paid or reimbursed the paid holiday allowance, and this also may lead to increases in severance payment entitlements (due to the manner in which they are calculated in Korea, which takes into account leave and certain other allowances).
ii Notable cases
In a lawsuit filed by bus drivers against their employer, seeking payment of additional allowances (such as overtime, night shift, etc.), the Supreme Court in 6 February 2020 judged that a 'comprehensive wage agreement' had not been established despite the wording in the labour contract, considering the fact that the company had been separately paying holiday and annual allowances in addition to the drivers' wages.
The comprehensive wage system, under which the wage paid to the employee is set at a level so as to include all legal allowances such as overtime pay and holiday pay, is widely used in practice. The Supreme Court acknowledges the validity of such a comprehensive wage agreement if certain requirements are met (including that the arrangement is not disadvantageous to workers and is justified in light of various circumstances), but has typically applied the test for validity of the comprehensive wage agreement in a strict manner. As in this case, even if there is a comprehensive wage provision in the labour contract, if some allowances are in fact paid separately, there is a risk that such allowances would be added to the comprehensive wage in calculating the amount of various employee entitlements (effectively undermining the purpose of the comprehensive wage agreement). For this reason, it is necessary to design and operate the comprehensive wage system carefully.
Also, the recent decision of the National Labour Relations Commission (NLRC) on 28 May 2020 has indicated that a driver participating in Tada, an app-based rideshare platform, should be deemed an employee of the platform provider because the driver performed his or her duties under a high level of direct supervision from the platform provider. The NLRC rejected the claim that the driver was a freelance contractor. The driver had filed a claim of unfair dismissal due to a reduction in the number of vehicles operated by Tada.
In recent years, a number of decisions by courts and the NLRC have had the effect of expanding the scope of what is deemed to be an employer-employee relationship, and the Tada case draws further attention to this issue as it could affect the judgment of worker status across the 'platform workers' who work through digital platforms such as smartphone applications. In this regard, based on the foregoing, when entering into M&A transactions, if the target purports to operate with a workforce composed of independent contractors rather than employees, a careful legal review is required to verify this position.
i Notable amendments
Some notable amendments have been made to Korean tax laws, including the following.
Reduced securities transaction tax rate on unlisted stocks, etc.
For transactions occurring on or after 1 April 2020, the rate of securities transaction tax on transfers of unlisted shares and OTC transactions of listed shares has been reduced from 0.5 per cent to 0.45 per cent, reducing transaction costs for investors.
Increased capital gains tax rate for a major shareholder when transferring shares of an unlisted small or medium-sized enterprise
For transactions occurring on or after January 1, 2020, capital gains tax has increased for major shareholders, referring to shareholders with a stake of 4 per cent or more, when transferring shares of an unlisted small or medium-sized enterprise, from the previous 22 per cent single tax rate (including local income tax) to 27.5 per cent (including local income tax) for transfers where the capital gain exceeds 300 million won.
Introduction of income contingency between domestic and overseas shares
From 1 January 2020, capital gains and losses may now take into account profits and losses in respect of both domestic and overseas shares incurred during the relevant period. Previously, profits and losses in respect of domestic stocks and foreign stocks were required to be calculated separately (for example, losses on disposal of domestic stocks previously could not be deducted from gains on the disposal of foreign stocks).
ii Notable cases
A recent Supreme Court decision in 2019 confirmed that a resident or non-resident, when paying a deposit (which is liable to be released to the counterparty by way of contractual penalty or liquidated damages) to a non-resident, is obliged to withhold from the deposit. Consequently, it is necessary to include withholding provisions in the agreement when providing for payment of a deposit to a non-resident.
On 24 June 2008, domestic corporation A signed a contract (the First Contract) with corporation B, located in Malaysia, to purchase 100 per cent of the shares in a domestic corporation C (the Subject Shares), and paid a deposit of 58 billion won. On 29 September 2008, A entered into a contract (the Second Contract) with B to reduce the initial sales price and change the settlement date for payment of the purchase price to 28 November 2008, and paid an additional deposit of 1 billion won on 24 October 2008 and 31 October 2008. On 26 November 2008, another domestic corporation D assumed the contractual rights and obligations of A under the Second Contract, but failed to pay the balance of the purchase price to B, the seller, by 28 November 2008. The First Contract provided that the deposits were non-refundable, and the Second Contract provided that in the event of a buyer default, the deposit should be forfeited to the seller as a penalty (which is enforceable under Korean law).
The main issue was, when a deposit amount is released by a domestic corporation to a foreign corporation as a penalty, whether such domestic corporation should bear a withholding obligation in Korea, considering the fact that the deposit amount had been already paid to the foreign corporation.
The Supreme Court confirmed that the domestic corporation should bear the withholding obligation, because the Corporate Tax Act only targets penalties or indemnities paid in Korea as domestic income and does not impose any restrictions on the method of payment, and the scope of the withholding tax obligation (as it relates to penalties) is not limited to cases where the relevant amount can be practically and possibly be withheld. Also, a purchaser may claim reimbursement from the foreign corporation after initially paying the amount of withholding tax.
Following this decision, in any transaction where there is a non-resident seller that may receive a deposit as a penalty and is a resident of a jurisdiction with a tax treaty with Korea, it is necessary to clarify in the sale and purchase agreement the fact that any forfeiture of the deposit may result in withholding tax, and expressly provide which party will bear the withholding tax.
i Overview and notable cases
In 2019, the KFTC reviewed 766 M&A deals, with an aggregate transaction value amounting to 448.4 trillion won. Compared to 2018, the total number of M&A deals reviewed by the KFTC increased from 702 to 766, but the value of those deals decreased from 486.6 trillion won to 448.4 trillion won. During the first half of 2020, 424 reportable transactions were notified to the KFTC, which is a slight increase over the 349 cases during the first half of 2019, yet total deal value has decreased slightly from 201.9 trillion won to 148.7 trillion won.
One of the notable cases reviewed by the KFTC in 2020 was the business combination between Danaher Corporation and General Electric Company, reported to the KFTC on 13 May 2019, in which Danaher Corporation sought to acquire the biopharma business division of General Electric Company. The KFTC determined that, in order to prevent the harmful effects of monopolies in the biopharmaceutical production equipment and consumables market, which are essential to the growth and innovation of the bio-industry, either of the two companies would be required to sell their business operations and assets covering eight biopharmaceutical products which the KFTC identified as raising concerns of monopolisation post-merger. This corrective action is the first case in which corrective action was imposed for the business combination of the bio-process product market.
Other than the above, KFTC has approved the business combination report filed by Jejuair, Co, Ltd on 13 March 2020 in its acquisition of 51 per cent of Eastar Jet Co, Ltd's shares. In response to the situation in the aviation industry, which is suffering from the effects of the covid-19 pandemic, the KFTC carried out the screening procedures as quickly as possible. As a result of the review, KFTC decided to approve the business combination, considering Eastar Jet Co, Ltd to be an unrecoverable company as stipulated in the bankruptcy law and applying an exception to the usual restrictions on business combinations. Also, the KFTC approved LVMH-Moët Hennessy Louis Vuitton SE's acquisition of Tiffany & Co's shares on 12 June 2020. The review focused on the potential effects on competition in the global high-end jewellery market, where the two companies' businesses overlap, and the KFTC judged that the combination of the two companies is unlikely to limit competition in the related markets.
ii Notable amendments
On 10 June 2020, the KFTC announced a proposed amendment bill to the MRFTA, and it then carried out a period of consultation that concluded on 21 July 2020. The amendment bill, if passed by the National Assembly, will take effect one year after promulgation. The key areas of amendments regarding M&A, other than those that apply exclusively to domestic companies, are summarised as follows.
Size-of-transaction test for merger filings
When a large company acquires a small venture company or start-up, no merger filing obligation may be triggered if the total assets and turnover of the target company do not meet the threshold for the current merger filing requirements, even if the target company has significant growth potential and the merger would later constitute a monopoly or oligopoly in the market or create a barrier to entry.
To address this issue, the amendment bill introduces a size-of-transaction test to impose a filing obligation when the acquisition price is above a certain level and the target company has a significant presence in the Korean market, even if the target company's turnover (or total assets) is short of the current threshold for filing (30 billion won). The specific criteria to determine whether a filing obligation is triggered are expected to be prescribed when the Enforcement Decree of the MRFTA and other subordinate rules and regulations are amended.
Statutory grounds for imposing penalty after merger or spin-off
The amendment bill introduces new provisions to provide the legal grounds for imposing corrective measures or administrative fines, or both, on entities even after a merger or spin-off.
The covid-19 pandemic is causing a global recession, and it is expected that the economic downturn will continue not only in Korea but also throughout the world. If companies continue to struggle with profitability, they will feel a liquidity squeeze, which will inevitably lead to restructuring, as has already been observed in the aviation, accommodation/hotel, travel and fashion industries. As Korea is still an export-driven trading country, it is expected that there will be a downside impact on manufacturing industries that depend on exports such as automobiles, steel, shipbuilding and shipping. In particular, conglomerates like Doosan Group have implemented self-help measures by selling affiliates and assets (such as office buildings, real estate and golf courses) to secure liquidity in the current crisis. On the other hand, conglomerates may initiate M&A transactions in the second half of the year to reorganise their businesses, and KDB-led restructuring transactions are expected to continue (e.g., KDB Life Insurance Co, Ltd, SsangYong Motor Co, Ltd, Doosan Group and Asiana Airlines Inc). Private equity firms are also expected to take a stronger interest in the market. Mid-size companies are expected to be involved in transactions mainly involving the sale of assets, such as real estate, in order to secure liquidity.