Ailing Daewoo Shipbuilding to get $2.4bn from creditors  


Creditors of the financially-troubled Daewoo Shipbuilding & Marine Engineering (DSME) plan to financially support the South Korean shipbuilder with KRW 2.8 trillion (USD 2.4 billion), under proviso that the company’s labour union accepts the restructuring scheme, local media reported.

DSME’s creditors, the Korea Development Bank (KDB) and the Export-Import Bank of Korea, have introduced the restructuring plan to prevent the shipbuilder’s delisting from the stock market.

Under the plan, KRB intends to convert KRW 1.8 trillion of debt into equity. The bank has already converted around KRW 400 billion worth of loans into DSME’s stocks.

The second creditor, the Export-Import Bank of Korea, plans to buy KRW 1 trillion worth of bonds that will be sold by the shipbuilding company.

However, the creditors said they will implement the restructuring scheme, which includes a workforce reduction, only if the labor union refrains from taking industrial action.

The labor union is now required to accept the scheme until Wednesday next week, Yonhap News Agency cited industry sources as saying.

Last week, DSME said it intends to raise an additional KRW 700 billion through asset sales in 2016, as the shipbuilder expects to add up to five times less orders to its order book this year than initially projected.

With the new measure, DSME would raise a total of KRW 6 trillion through its self-rescue plan.

Earlier this year, DSME revealed it will slash its workforce by 12,000 to 30,000 by 2019 as part of its cost-cutting measures. 

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