The Korea Development Bank (KBD) and other creditor banks of Daewoo Shipbuilding & Marine Engineering are considering a debt workout plan for the financially troubled shipbuilder, the latter revealed on 15 July.
In a Korea Exchange filing South Korea’s third biggest shipbuilder said, “A concrete decision has yet to be reached but we hope to make further announcements within a month.”
At the end of 2014, DSME had total debts of KRW15.526 trillion (USD13.6 billion), up from KRW13.71 trillion at the end of 2013.
If the plan goes ahead, it would be the second time DSME had had its debts restructured.
In 1998, when the Daewoo Group plunged into financial difficulty during the Asian financial crisis, the government instructed state-owned KDB to bail out the shipbuilding unit. In the process, KDB became DSME’s major shareholder.
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Analysts predict a tough year for DSME, which has booked bad debts of KRW125 billion relating to Taiwanese shipping group TMT defaulting on ships ordered in earlier years.
Operating cash flows, a leading indicator in the order-driven sector, deteriorated to a KRW787.9 billion deficit and net debt increased by KRW500 billion, eroding the balance sheet compared with 2014.
DSME also paid out retroactive overtime wages of KRW45 billion in the first quarter of 2015.
The company’s financial woes were brought into the spotlight when several of its yard workers went on strike on 7-8 July, after the shipbuilder failed to meet a 7 July deadline for paying out KRW20 billion in outstanding wages. DSME told IHS Maritime then that its management was having cash flow difficulties and that it was talking with the workers’ union to resolve the situation.
This post was sourced from IHS Maritime 360: View the original article here.
