Private investment on social overhead capital facilities has been increased in the last ten years. The government adopted guidelines for the Refinancing for Private Investment Projects in order to operate private investment in a superior way and regulated that profits made by the Refinancing for Private Investment Projects should be shared with the government and private enterprises together. Differently from general cases of refinancing, the Refinancing for Private Investment Projects in Korea could not bring an increase in return for investors through cutting down equity capital or changing the conditions for debt finance because it includes some cases in which a new investor undertakes debt finance.
Since it is necessary to investigate the forms and beneficiaries of profits made by the Refinancing for Private Investment Projects, this report analyzes the case of Refinancing for Private Investment Projects of Cheonan-Nonsan Expressway. In this case, because both changing investors and the Refinancing for Private Investment Projects are available, new investors achieved high expected rate of return through purchasing stock with the face value and made profits by the corporation tax reduction and advanced collection of investment through the refinancing in which some of equity capital were changed with subordinated bonds. However, there is no evidence to approve that the new investors share profits from the Refinancing for Private Investment Projects with the government.
According to the Evaluation of the Refinancing for Private Investment Projects, the government will go on a negotiation for the Refinancing for Private Investment Projects in a prudent way but it is necessary to establish a verification system as well as to ameliorate certain regulations related to the refinancing. Especially in the case of some private investment projects supported by national finance, it should be considered to introduce a system reporting the results of negotiation to the National Assembly because the amount of financial support could be changed depending on the results of negotiation.