A subsidiary of the nation's largest steel-making company POSCO is set to go bankrupt as part of chairman Kwon Oh-joon's willingness to have intense restructuring on the group’s money-losing subsidiaries.
According to the regulatory filing of steel maker on Thursday, the group decided to remove the revival process of its alumina supplier Pos-HiaL.
Pos-HiaL will undergo a bankruptcy procedure led by the court after disposing its assets and allocating its shares to creditors.
POSCO's official said, "While we were proceeding with the sale, we decided to go through a bankruptcy process because there was no buyer."
Pos-HiaL was set up in 2012 in a bid to produce ultrapure alumina, key materials for LED. POSCO predicted that the demand on the alumina rose by more than 30 percent a year, but the market lost its vigor and has seen weakening profitability.
The company started out with 1.2 billion won in operating loss first year and the figure continued to rise to 2.5 billion won in 2013 and 5.7 billion won last year.
The bankruptcy of its subsidiary is the first since POSCO set up in 1968. The steel maker is also reportedly pushing ahead with sales of an urban mine of POSCO M-Tech, steel raw materials and packing materials provider.
Earlier, its chairman Kwon Oh-joon announced that the company would reduce 30 percent of overseas branches and 50 percent of domestic business during the press briefing in July.
