SEJONG, March 23 (Korea Bizwire) – South Korea’s top economic policymaker said Thursday that the government will offer liquidity to cash-strapped Daewoo Shipbuilding & Marine Engineering Co. in a timely manner if all stakeholders shoulder losses.
“Creditors of Daewoo Shipbuilding have closely looked into all options, which includes the company’s backlogs,” Finance Minister Yoo Il-ho said in a ministerial-level meeting on corporate restructuring in Seoul. “If all interested parties, including policy lenders and private creditors, agree to fully share the burden, the government will inject capital in a timely manner.”
Yoo said the government-led rescue package based on debt-for-equity swaps aims to carry out sweeping reforms and reorganize shipyard’s business portfolio to allow it to generate profit.
The company will focus on merchant ship and arms manufacturing lines, while its offshore plant business, which has been suffering massive losses due to a worldwide slump in the industry, will be streamlined.
If the stakeholders fail to reach an agreement, the company will be put under a mandatory debt-workout program.
Daewoo Shipbuilding has been saddled with a deepening liquidity shortage amid a plunge in new orders.
The shipbuilder suffered an operating loss of 1.61 trillion won (US$1.44 billion) last year following an operating loss of 2.94 trillion won in 2015.
The government has refused to inject fresh taxpayer money into the troubled shipbuilder, saying creditors must carry out their own restructuring program.
“Daewoo Shipbuilding has earned 15 trillion won after having sold 86 ships and offshore plant vessels so far and saved an additional 1.8 trillion won,” Yoo said. “But it is impossible for the company and creditors themselves to solve the liquidity problem because of the worldwide slump.”
He said the government will do its best to complete the ongoing corporate restructuring despite the presidential election slated for May 9.