SEOUL, Dec. 6 (Korea Bizwire) — Samsung Heavy Industries Co., one of the world’s leading shipbuilders, said Wednesday that it will raise 1.5 trillion won (US$1.3 billion) in a rights issue by May to improve its financial status.
The capital increase “is aimed at paying corporate bonds and other debts maturing in 2018, as well as pre-emptively responding to an additional reduction in borrowings in the financial sector due to worsening performance,” Samsung Heavy said in a statement.
Samsung Heavy already raised 1 trillion won by issuing shares in November last year to secure funds for operations. It is one of the world’s major shipbuilders, which have struggled with an oversupply of vessels and declining orders since the 2008 financial crisis.
Separately in a regulatory filing, the shipyard said its operating loss next year could narrow to 240 billion won from an estimated 490 billion won this year.
“The operating losses are attributable to increased fixed costs, including wages, amid decreased sales, higher thick steel plate prices, and one-off costs stemming from retirement programs for some 700 employees,” Koo Sang-ok, a senior manager of Samsung Heavy, said over the phone.
The Geoje-based shipyard currently has 11,500 employees.
Samsung Heavy said it could turn around in 2019 as the expected losses in 2017 and 2018 are mainly due to irregular expenses and the shipbuilding business environments have hit the bottom.
The company also expects to receive orders worth $7.7 billion in 2018, slightly up from an estimated $7.4 billion this year.
In 2016, it bagged $500 million worth of orders, accounting for only 10 percent of its target figure for the whole year due to an extended slump in the shipbuilding industry.