SEOUL, KOREA - Korea Railroad Corp. is reported to sell off Korail Airport Railroad Co., the operating company of a railway line that links Seoul train station with Gimpo Airport and Incheon International Airport, as a way to pay down the huge debt within the year's end. According to a news report by the local daily Hangyeore on February 13, the state-run railroad company had already submitted to the Ministry of Strategy & Finance a plan to normalize its operation that included the sell-off proposal.

 

The 1.8-trillion-won cash generated from disposing of the Airport Line asset will be used to reduce its mounting debt. It is estimated the debt-to-equity ratio will be cut to 397.4 percent from 556.2 percent projected by the end of this year.

 

A Korail official said, "A scheme to adjust the ownership structure of the Seoul Station-Incheon Airport Line was included in the normalization plan submitted recently to the finance ministry. A significant stake in the currently profitable subway line will be sold to private-sector bidders while Korail retains the management control as a minority shareholder."

 

The restructuring plan suggested by Korea Railroad is somehow a compromise between the proposals made by the Ministry of Land, Infrastructure, and Transportation and the state-run company. Earlier, the transportation ministry said its priority would be to pay down Korail's debt so that its debt ratio could come down the 400-percent level.

 

Korail had purchased in September 2009 an 88.8-percent stake in the already debt-ridden Airport Line from nine private construction companies including Hyundai Engineering & Construction at the cost of 1.2 trillion won.