Samsung Heavy Industries (SHI) has acceded to the Export-Import Bank of Korea’s request to assist Sungdong Shipbuilding’s rehabilitation.
The three parties signed an agreement on 31 August that will see SHI, the world’s second biggest shipbuilder, assisting Sungdong for four years, with an option to extend the assistance by three years. The bank will financially support Sungdong while SHI will provide help in the form of technical and operations expertise.
Through the collaboration, SHI would outsource the manufacturing of shipbuilding blocks to Sungdong and tap on its sales networks to help the struggling shipbuilder to win ship orders.
SHI CEO Park Dae-young said, “While the prolonged period of the tough shipbuilding market is a big burden, we can strengthen the industry through synergistic ship production.”
Korea EXIM Bank is Sungdong’s major creditor and shareholder, holding a 71% stake.
The bank’s chairman and president Lee Duk-hoon said, “The signing of this contract completes the bank’s customised restructuring plans for small and mid-sized shipbuilders and marks a new life story of the shipbuilding industry.
“We hope that by tapping on SHI’s cutting-edge technologies and Sungdong’s specialisation in small and mid-sized vessels, South Korea can recapture its top position among shipbuilding nations in the latter sphere.”
Founded in 2001, Sungdong, which builds bulkers and tankers, incurred consecutive losses after the 2008 global financial crisis. As at end-2014, its debt exceeded its assets by about USD1 billion.
Sungdong’s orderbook stands at 1.86 million cgt, the ninth biggest in the world.
Sungdong’s creditors are hopeful that the collaboration would help the shipbuilder to pay off its debts. They believe the collaboration is a win-win solution.