Parties in CVD Cases on D/E Restructurings Ask CIT to Extend Stay
The parties in a pair of countervailing duty suits asked the Court of International Trade to continue a stay in the cases pending the result of a separate action involving the same parties on whether the Commerce Department can countervail exporter KG Dongbu Steel Co.'s debt-to-equity restructurings. KG Dongbu, the U.S., petitioner Nucor Corp. and the South Korean government asked Judge Jennifer Choe-Groves to continue the stay pending the result of the lead action (KG Dongbu Steel Co. v. United States, CIT #s 23-00055, 24-00056).
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In the lead case, Commerce decided on remand not to countervail KG Dongbu's three debt-to-equity restructurings in the 2019 review of the CVD order on corrosion-resistant steel products from South Korea (see 2407030073). The agency decided in the underlying review to countervail the restructurings after declining to do so in the previous three reviews.
Commerce reversed course on remand under "respectful protest" since it disagreed with the trade court's ruling that the benefit cannot be re-evaluated during each review period.
In 2015 and 2016, when it was just Dongbu Steel, the South Korean company's creditors committee approved debt-to-equity swaps by government-controlled and private banks. In the first, second and third CVD reviews, Commerce said the swaps were in line with the typical investment practice of private investors and didn't amount to a countervailable benefit.
In 2019, the KG Consortium acquired Dongbu Steel, which also received a fourth debt-to-equity swap and restructuring of its outstanding long-term loans and bonds. During the 2019 review, Commerce said the three debt-to-equity swaps are countervailable, noting it had not countervailed them in the first three reviews because they were not "significant" under its regulations.