SEOUL, Dec. 1 (Korea Bizwire) – South Korea’s major shipyards have to pay off or refinance a combined 2.22 trillion won (US$1.89 billion) worth of corporate bonds due next year amid concerns over their worsening financial status, industry sources said Thursday.
According to the sources, Daewoo Shipbuilding & Marine Engineering Co., one of the country’s big three shipyards, faces a total of 940 billion won worth of corporate debts due next year. The shipyard holds cash and cash equivalent assets totaling 749 billion won, stoking worries that the shipbuilder may face a liquidity crisis.
Daewoo Shipbuilding is seeking to sell noncore assets and receive part of the money from its clients earlier than scheduled, to prepare for the repayment of massive maturing debt. Earlier this month, its creditors, led by the state-run Korea Development Bank, also decided to provide a total of 2.8 trillion won in financial aid to improve its financial health.
But Daewoo Shipbuilding’s short-term debt stands at a whopping 5.2 trillion won, including 1.41 trillion won in debt owed to private bond holders.
“We are working on a plan to handle maturing debts, and a maturity extension may be possible for part of the short-term debts,” a company official said.
Samsung Heavy Industries Co. also has to pay off or refinance 600 billion won worth of corporate debt due next year, while it holds 1.19 trillion won worth of cash and cash equivalent assets as of end-September.
The shipyard also recently secured 1.14 trillion won by selling stocks, but the company’s total debt remains high at some 4.3 trillion won.
Hyundai Heavy Industries Co., the biggest shipyard in the country, also faces 680 billion won worth of corporate debt that matures next year.
“We hope that our financial health will improve after a split-off of noncore business units,” said a company official.
Earlier, Hyundai Heavy announced a scheme to reorganize its businesses into six separate companies next year in its latest efforts to regain competitiveness and financial health.
The decision comes in the form of part of the shipyard’s self-rescue plans announced early this year in which it said it will seek to sell noncore assets and cut jobs.
The nation’s big three shipyards racked up a combined loss of over 8 trillion won last year. It was the first time that all three of the nation’s largest industry players registered losses due to a delay in the construction of offshore facilities and a sharp drop in new orders.