Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

20.	Commitments and Contingencies

As at December 31, 2019, major commitments with local financial institutions are as follows:

(In millions of Korean won

and thousands of foreign currencies)

Financial institution

Currency

Limit

Used
amount

Bank overdraft

Kookmin Bank and others

KRW

1,637,000

—

Inter-Korean

Cooperation Fund

Export-Import Bank of
Korea

KRW

37,700

3,454

Collateralized loan on electronic accounts receivable-trade

Shinhan Bank and others

KRW

467,560

29,102

Plus electronic notes payable

Industrial Bank of Korea

KRW

50,000

3,138

Loans for working capital

Korea Development Bank
and others

KRW

254,193

154,693

Facility loans

Shinhan Bank and others

KRW

102,122

Kookmin Bank and others

USD

212,000

87,940

Facility loans on ships

Shinhan Bank

USD

3,000

Derivatives transaction limit

Korea Development Bank

KRW

100,000

18,458

Total

KRW

2,648,575

208,924

USD

215,000

90,940

As at December 31, 2019, 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			166,315
			USD			1,200
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			59,304
			PLN	1		13,751
Comprehensive credit line	KEB Hana Bank and others		KRW			40,000
	KEB Hana Bank		USD			10,000
Bid guarantee	KEB Hana Bank		USD			400
Bid guarantee			KRW			42,581
Performance guarantee /Warranty Guarantee	Korea Software Financial Cooperative and others		KRW			460,871
Guarantee for advances received/others			KRW			218,267
Warranty guarantee			KRW			562
Guarantees for licensing			KRW			6,578
Guarantee for deposits	Seoul Guarantee Insurance		KRW			3,586
Merchant business guarantee insurance			KRW			169

Total			KRW			938,929
			USD			76,884
			PLN	1		13,751

Polish Zloty.

As at December 31, 2019, guarantees provided by the Group to a third party, are as follows:

(In millions of Korean won and
thousands of foreign currencies)

Subject to payment
guarantees

Creditor

Currency

Limit

Used
amount

Period

KT Estate Inc.

Busan Gaya Centreville Buyers

Shinhan Bank

KRW

4,829

4,137

Nov 10, 2017

~Oct. 31, 2020

KT Estate Inc.

Daegu Beomeo-Crossroads SeohanIDaum Buyers

Shinhan Bank

KRW

8,028

6,985

Oct 29, 2017

~Nov. 30, 2020

KT Hitel Co., Ltd.

Shinhan Bank

Cash payers

KRW

683

—

Apr 19, 2019

~Apr 17, 2020

The Controlling Company is jointly and severally obligated with KT Sat Co., Ltd. to pay KT Sat Co., Ltd.’s liabilities incurred prior to

spin-off.

As at December 31, 2019, the Controlling Company and KT Sat Co., Ltd. are jointly and severally liable for reimbursement of

￦

2,682 million.

For the year ended December 31, 2019, the Group made agreements with the Securitization Specialty Companies (2019: Giga LTE Forty third to Forty eighth Securitization Specialty Co., Ltd., 2018: Giga LTE Thirty seventh to Forty second Securitization Specialty Co., Ltd.), and disposed of its trade receivables related to handset sales. The Group also made asset management agreements with each securitization specialty company and in accordance with the agreement the Group will receive asset management fees upon liquidation of securitization specialty company.

As at December 31, 2019, the Group is a defendant in 190 lawsuits with the total claimed amount of

￦

214,877 million (2018:

￦

169,246 million). As at December 31, 2019, litigation provisions of

￦

62,241 million (2018:

￦

58,776 million) for pending lawsuits and unasserted claims are recorded as liabilities for potential loss in the ordinary course of business. The final outcomes of the cases cannot be estimated as at December 31, 2019.

In December 2013, Asia Broadcast Satellite Holdings Ltd. (“ABS”) filed a request for meditation to the International Chamber of Commerce (“ICC”) for the compensation of damages from the ownership of the satellite

Koreasat-3

(“K3”) and the alleged breach of the entrustment control contract related to K3, which was made and entered into with the Controlling Company and its subsidiary, KT Sat Co., Ltd. At the end of reporting period, the Controlling Company and its subsidiary, KT Sat Co., Ltd., requested to appeal to the U.S. Supreme Court in December 2019 in response to the second U.S. Court of Appeals, but it was finally closed in February 2020 with a dismissal of appeal decision.

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.

As at December 31, 2019, the Group participates in Algerie Sidi Abdela new town development consortium (percentage of ownership: 2.5%) and has joint liability with other consortium participants.

As at December 31, 2019, contract amount of property and equipment acquisition agreement made but not yet recognized amounts to

￦

851,798 million (2018:

￦

1,474,009 million).