The financially troubled South Korean shipbuilder Hyundai Heavy Industries (HHI) could be hit by another hurdle as the company’s unionized workers are planning to launch a strike, according to The Korea Times.
The workers said that this year’s wage negotiations with the company are behind the walkout, however, there are reports that HHI’s self-rescue plan, which includes huge layoffs, could also be the cause.
As part of an effort to normalize its management, at the beginning of June, the company received approval for a KRW 3.5 trillion (USD 3.02 billion) worth management improvement plan from its creditors.
Through the plan, scheduled to be implemented by 2018, HHI expects to secure KRW 1.5 trillion with the sale of its shares of Hyundai Motor and KCC, its stakes in Hyundai Avancis, and certain properties and receivables.
The shipbuilder also plans to secure KRW 900 billion with an employee salary cut and work-sharing, as well as KRW 1.1 trillion with the spin-off and sell-off of a part of its business, and the reorganization of affiliated companies.
HHI is also considering a contingency plan that would provide it with an additional amount of KRW 3.6 trillion if needed.
Once the plan is in place, HHI expects that its liabilities-to-equity ratio will drop from the current 134% to 80% by 2018, and its total debt to be cut down by about KRW 2 trillion to KRW 6.6 trillion.
According to data reported by The Korea Herald, HHI’s sales dropped by almost 14 percent during May. Namely, the company’s sales were at KRW 1.6 trillion, while the sales for the year so far were just under KRW 9 trillion.
The announcement follows a decision from the unionized workers of Daewoo Shipbuilding & Marine Engineering Co. (DSME) to launch a strike against the company’s self-rescue plan, after the majority of the workers voted in favor of a walkout.
The union did not specify the date of the planned walkout.
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