South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) has announced that it is moving ahead with the sale of its golf course operating subsidiary, FLC.
In a filing to the Korea Exchange 13 July, the country’s third-biggest shipbuilder said, “We’re in the midst of selling FLC in order to concentrate on our core competencies. Since December 2014, we have been looking to attract a buyer and we hope to reveal more in the next six months.”
This announcement comes after a strike on 7-8 July by a number of shipyard workers over KRW20 billion owed to them in ‘ordinary wages’. The shipbuilder was to have paid them by 7 July but said cashflow problems prevented it from doing so.
DSME told IHS Maritime it was in discussions with the workers to resolve the situation.
The company is carrying a heavy debt in the face of delayed drillship deliveries and payments. It booked a net loss of KRW172.4 billion (USD 152 million) for the first quarter of 2015 and analysts expect it to be in the red for 2Q15 too, potentially with a KRW83 billion loss.
DSME has recognised bad debt expenses of KRW100 billion per annum and residual long-term accounts receivable have decreased from KRW2.2 trillion in 2011 to KRW1.05 trillion.
In need of huge restructuring, DSME is also said to be interested in selling its Romanian subsidiary, DSME Mangalia, and Chinese subsidiary DSME Shandong Shipbuilding, but such a transaction would be trickier given that the Romanian and Chinese governments have stakes in those respective yards.
Korean media reports also claim DSME could offload other subsidiaries such as Dewind, DSME Trenton, and DSME Construction as it works to restore profitability.