At the end of last year, the shipyard’s debt ratio stood at 7,000 percent, and its stock trading has been suspended since June. (image: Wikimedia)
SEOUL, Dec. 13 (Korea Bizwire) – Embattled Daewoo Shipbuilding & Marine Engineering Co. is expected to receive 2.8 trillion won (US$2.39 billion) from its creditors this month, averting a delisting from the local stock market, industry sources said Tuesday.
Last month, the creditors, led by the state-run Korea Development Bank (KDB), decided to provide the financial aid, in the form of a debt-for-equity swap, to the ailing shipyard whose debts exceed assets amid mounting losses.
According to the sources, Daewoo Shipbuilding will hold a board meeting next week to approve the sale of a 1 trillion-won perpetual bond to the Export-Import Bank of Korea. The perpetual bond, which is counted as capital, will carry a maturity of 30 years, the sources said.
Earlier this week, the shipyard’s board room also decided to sell stocks to the KDB. The state-run lender will swap 1.8 trillion won of debt owed to the shipyard for its stocks.
At the end of last year, the shipyard’s debt ratio stood at 7,000 percent, and its stock trading has been suspended since June.
After the capital injection, its debt ratio will be reduced to 900 percent, the sources said.
South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.
The country’s top three shipyards — Hyundai Heavy Industries, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. — suffered a combined operating loss of 8.5 trillion won last year. The loss was due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump, with Daewoo Shipbuilding alone posting a 5.5 trillion-won loss.
The shipbuilders have drawn up sweeping self-rescue programs worth 11 trillion won in desperate bids to overcome the protracted slump and mounting losses.
(Yonhap)
