South Korean Firms Cut Back Growth Plans

South Korea’s most powerful conglomerates, hearing alarm bells in the country’s financial crisis, are paring down their aggressive expansion plans at home and abroad, corporate executives said Friday.

Separately on Friday, Japan agreed to give the country financial help, but only on condition that South Korea assent to terms set for it in a proposed International Monetary Fund aid package.

Japan’s commitment came in a rushed meeting in Tokyo between Japanese Finance Minister Hiroshi Mitsuzuka and his South Korean counterpart, Lim Chang-yuel.

“I told Mr. Lim that Japan will extend financial aid to South Korea after the country reaches an agreement with the IMF on an aid package,” Mitsuzuka told reporters.

Conditions for an IMF aid package are expected to include measures for restructuring the South Korean economy that would be politically unpopular.

A senior Japanese Finance Ministry official said Lim did not ask for a specific amount of aid from Japan.

The IMF has yet to set the amount or terms of the loans. Seoul newspapers have reported that Lim would seek between $20 billion and $30 billion from Japan. Officials from the finance and economy ministries declined to comment.

South Korea’s currency took a plunge this week, prompted by reports that the country would need at least $60 billion in aid from the IMF and elsewhere to bolster market confidence.

Lim, who is also deputy prime minister, told Mitsuzuka that the South Korean economy is fundamentally stable and that its trade deficit is decreasing sharply but that it has problems in the financial sector since the won’s sharp fall.

South Korea’s four largest business groups--Hyundai Corp., Samsung Co., LG Group and Daewoo Corp.--remain a tower of strength. But money has been hard to come by even for them as yields on benchmark corporate bonds have soared to a punishing 18.85% and the stock market’s plunge erased billions of dollars of their market capitalization.

The problems do not stop on the companies’ home ground, as international investors have begun to reconsider their thoughts about South Korea’s multinational giants.

On Friday, LG Semicon Co., the semiconductor unit of LG Group, said it planned an indefinite postponement of a global depositary receipts issue.

The haphazard growth of South Korea’s chaebol--conglomerates that were long cosseted by protectionist goverments and that now dominate the country’s economy--and the huge debts they have incurred along the way are at the root of why Seoul is seeking billions in IMF assistance, economists say.

* IMF BONDS?: The International Monetary Fund is considering selling bonds. D3