KT CORP | CIK:0000892450 |

Filed: 4/30/2018

Entity registrant name: KT CORP (CIK: 0000892450)

Generator: Donnelley Financial Solutions

SEC filing page: http://www.sec.gov/Archives/edgar/data/892450/000119312518141554/0001193125-18-141554-index.htm

XBRL Instance: http://www.sec.gov/Archives/edgar/data/892450/000119312518141554/kt-20171231.xml

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19.	Commitments and Contingencies

As of December 31, 2017, major commitments with local financial institutions are as follows:

 

(In millions of Korean won and foreign currencies in thousands)		Financial institution		Currency				Limit				Used amount
Bank overdraft		Kookmin Bank and others			KRW				1,730,000				72
Commercial papers		NH Investment & Securities Co., Ltd.			KRW				370,000				300,000
Collateralized loan on accounts receivable-trade		NongHyup Bank and others			KRW				35,560				—
Collateralized loan on electronic accounts receivable-trade		Shinhan Bank and others			KRW				343,000				42,350
Plus electronic notes payable		Industrial Bank of Korea			KRW				50,000				140
Loans for working capital		Korea Development Bank and others			KRW				306,500				207,300
Green energy factoring		Shinhan Bank			KRW				16				16
FX forward trading commitment		Shinhan Bank			USD				11,500				—
Facility loans		Kookmin Bank and others			KRW				8,456				8,456
					USD				212,000				166,108
Facility loans on ships		Shinhan Bank			USD				30,000				15,000
Inter-Korean Cooperation Fund		Export-Import Bank of Korea			KRW				37,700				4,688
Total					KRW				2,881,232				563,022
					USD				253,500				181,108

As of December 31, 2017, guarantees received from financial institutions are as follows:

 

(In millions of Korean won and thousands of foreign currencies)		Financial institution		Currency				Limit
Performance guarantee		Seoul Guarantee Insurance and others			KRW				116,787
					USD				1,275
Guarantee for import letters of credit		Industrial Bank of Korea and others			USD				5,980
Guarantee for payment in foreign currency		KEB Hana and others			USD				54,072
					PLN	1			23,000
Guarantee for advances received		Export-Import Bank of Korea			USD				7,414
Comprehensive credit line		KEB Hana Bank and others			KRW				55,000
Bid guarantee		KEB Hana Bank			USD				400
Bid guarantee		Korea Software Financial Cooperative			KRW				96,911
Performance guarantee /Warranty Guarantee					KRW				302,062
Guarantee for advances received/others		Korea Software Financial Cooperative and others			KRW				99,228
Warranty guarantee		Seoul Guarantee Insurance			KRW				2,962
Guarantees for licensing					KRW				4,077
Guarantees for public sale					KRW				50
Guarantees for deposits		Seoul Guarantee Insurance and others			KRW				4,203
Total					KRW				681,280
					USD				69,141
					PLN	1			23,000

 

1	Polish Zloty.

As of December 31, 2017, guarantees provided by the Group to a third party, are as follows:

 

The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.’s liabilities prior to spin-off. As of December 31, 2017, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of ￦4,328 million.

For the year ended December 31, 2017, the Group entered into agreements with GIGA LTE Thirty-first to Thirty-sixth Securitization Specialty Co., Ltd. and KT M Mobile 1st Securitization Specialty Co., Ltd. (2016: Olleh KT Twenty-fifth to Twenty-sixth Securitization Specialty Co., Ltd. and GIGA LTE Twenty-seventh to Thirtieth Securitization Specialty Co., Ltd.), and disposed its trade receivables related to handset sales. The Group also made asset management agreements with each securitization specialty company and will receive the related management fees.

As of December 31, 2017, the Group is a defendant in 187 lawsuits with an total claims of ￦112,639 million (2016: ￦77,461 million). As of December 31, 2017, litigation provisions of ￦18,306 million for various pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcome of the case cannot be estimated as at the end of the reporting period.

On December 24, 2013, Asia Broadcast Satellite Holdings Ltd. (“ABS”) filed a request for arbitration with the International Centre for Dispute Resolution of the American Arbitration Association for the compensation of damages from the relocation of the ground equipment and the alleged breach of the entrustment control contract related to the satellite Koreasat-3, which was made and entered into with the Controlling Company and its subsidiary, KT Sat Co., Ltd. Subsequently on December 31, 2013, ABS filed another request for arbitration with the International Court of Arbitration of the International Chamber of Commerce (ICC) for the claim on the ownership of the satellite Koreasat-3 and compensation for the damages from the alleged breach of the sales contract entered into with the Controlling Company and its subsidiary, KT Sat Co., Ltd. These two cases were combined by the ICC to be treated as a single case for the arbitration. On July 18, 2017, the ICC issued a partial ruling in favor of ABS that ABS has the ownership right to the Koreasat-3 satellite. Following the ruling, on October 12, 2017, the Controlling Company and KT Sat Co., Ltd., as joint defendants to the arbitration, filed a lawsuit for cancellation of the arbitration ruling at the New York Court of Appeals in the United States. On March 9, 2018, the ICC made the final ruling in favor of ABS that the Controlling Company and KT Sat Co., Ltd. should compensate ABS for the damage of $748,564 and the accumulated interest of $287,673.15 for the period from December 1, 2013 to March 9, 2018, and the interest for delay at 9% per annum. As the final ruling by the ICC was based on the presumption that the partial ruling that the satellite belongs to ABS is valid, the Controlling Company and KT Sat Co., Ltd. are contemplating to file an additional appeal for the arbitration rulings at the New York Court of Appeals. At the end of the current reporting period, the final outcome of these claims cannot be reasonably estimated.

According to the financial and other covenants included in certain debentures and borrowings, the Group is required to maintain certain financial ratios such as debt-to-equity ratio, use the funds for the designated purpose and report to the creditors periodically. The covenant also contains restriction on provision of additional collateral and disposal of certain assets.

At the end of the reporting period, the Group is offering construction completion guarantee agreement to development of Nonsan Hwagidong apartment complex. If a contingent event occurs in between November 24, 2017 and to August 9, 2019, the Group collaterally guarantees the debt of AbleNS 1st Co. up to ￦9,000 million.

At the end of the reporting period, the Group participates in Algerie Sidi Abdela new town development consortium (percentage ownership: 2.5%) and has joint liability with other consortium participants.

At the end of the reporting period, contract amount of property, plant and equipment acquisition agreement made but not yet recognized as liabilities amounts to ￦622,059 million (2016: ￦489,753 million).