South Korean mid-tier shipbuilder ShinaSB is up for sale again, after a previous sale attempt fell through.
Potential buyers submitted letters of intent to ShinaSB’s shareholders on 30 June and assessment of the bids began the following day.
This is ShinaSB’s second attempt at a sale after an earlier attempt failed last year.
The debt-laden shipbuilder specialises in constructing product and chemical tankers ranging in capacity from 40,000-51,000 dwt.
The latest sale attempt comes after the Changwon District Court earlier this year appointed accounting firm Samjong KPMG to take over Samil PricewaterhouseCoopers in supervising the sale.
ShinaSB, based in Tongyeong, Gyeongnam province, was established in 1991.
In 2008, at the height of the shipping boom and just before the global financial crisis, ShinaSB recorded net profit of KRW98.9 billion (USD88 million), operating profit of KRW154.6 billion, and KRW836.2 billion in sales.
ShinaSB together with Sungdong Shipbuilding & Marine Engineering, SPP Shipbuilding, Samho Shipbuilding, and 21st Century Shipbuilding were regarded as the five biggest shipbuilders in Tongyeong in their heyday.
ShinaSB’s fortunes, like many of its peers, reversed in 2009 when the global recession struck and it applied to the South Korean courts for debt restructuring at the end of that year. The company ended up in the control of creditor banks.
The Korea Trade Insurance Corporation has been ShinaSB’s major shareholder since it underwent restructuring, holding a 65.47% stake.
Despite ShinaSB’s efforts at reorganisation and even after the courts extended the period for restructuring, it applied to the Changwon District Court for corporate rehabilitation in April 2014.
ShinaSB’s market price has been estimated at KRW200 billion, including its premises, technical expertise, and machinery.
Even as ShinaSB’s profitability deteriorated as it underwent debt workouts and corporate rehabilitation, the value of its tangible assets, machinery, and the land the shipbuilder occupies, has been assessed at KRW160 billion as at end of 2014.
For 2014, ShinaSB posted a KRW13.4 billion net loss, debts of KRW1.832 trillion, and interest payments of KRW195.4 billion. As at 2014, repayments of KRW215.9 billion have been made.
The party that takes over ShinaSB will have to submit a plan for continued rehabilitation, debt repayments, and debt-for-equity swaps.
ShinaSB’s Tongyeong neighbours have also fallen on hard times. For example, in 2012, 21st Century Shipbuilding was liquidated.
In 2013, Samho Shipbuilding, which was declared bankrupt in 2011, was given a new lease of life when South Korean company Korea Yanase bought it at an auction from the Changwon District Court and renamed Korea Yanase Tongyeong Shipbuilding.
Sungdong Shipbuilding & Marine Engineering has been undergoing debt restructuring and has been making a gradual recovery by winning a slew of product tanker orders, but SPP Shipbuilding has stopped building ships and has switched to block manufacturing.
SPP Shipbuilding, which has had cash-flow problems, is being controlled by its creditor banks, including Woori Bank and the Export-Import Bank of Korea.