Tong Yang Cement, which is currently under a court receivership, may slash its capital on a large scale to offset losses in prior years, according to a Reuters report. It is rumoured that the troubled cement producer will soon determine whether capital reduction will be executed and how much capital will be erased.

Tong Yang Inc, a holding company of Tong Yang conglomerate, sold debt worth KRW157bn (US$147m) during July-September via a special-purpose company using Tong Yang Cement's assets as a collateral.

Tong Yang Inc holds a 54.96 per cent stake in Tong Yang Cement. The stake is worth KRW120.6bn based on Thursday's close price of KRW1635 a share. If the capital cut is realised, Tong Yang's stake will be virtually worthless, putting investors in trouble.