Daewoo Shipbuilding files for court approval for debt rescheduling
SEOUL, April 20 (Yonhap) -- Troubled Daewoo Shipbuilding & Marine Engineering Co. said Thursday that it filed for a court approval for its debt rescheduling, paving the way for the shipyard to receive a fresh cash injection from its creditors.
With the court approval, expected to be due in two weeks, the world's largest shipyard by order backlog will be able to gain access to fresh financing help of 2.9 trillion won (US$2.54 billion) from creditors led by the state-run Korea Development Bank (KDB).
The financing, the second of its kind, aims to help the shipbuilder that has been suffering from severe liquidity problems over heavy losses in its offshore projects. The injection is expected to be made in early May.
Daewoo Shipbuilding said holders of its commercial papers (CP) agreed to a proposed debt rescheduling, clearing the last hurdle for it to receive the fresh cash injection to stay afloat.
Investors of Daewoo shipyard's papers, worth some 200 billion won, have submitted their consent to the shipbuilder. The debt was originally due in April 2018.
Earlier this week, Daewoo Shipbuilding got the nod from its investors, which hold some 1.35 trillion won worth of bonds.
The lifeline is a debt-for-equity swap for half of the company's debt and a delay in the payment of the dues for three years.
The approval by CP holders was widely expected as the National Pension Service (NPS), the largest investor in Daewoo Shipbuilding bonds, accepted the rescheduling plan Monday.
Under the overall rescue plan, half of the shipyard's corporate bonds and commercial papers will be converted into equity, with the rest being rolled over to give Daewoo some leeway. The state-run banks -- the KDB and the Korea Export-Import Bank -- will in exchange inject 2.9 trillion won into the company.
Late last month, the KDB-led creditors announced a fresh rescue package worth 6.7 trillion won for Daewoo Shipbuilding but only if all stakeholders agree to a debt-for-equity swap plan.
With the creditors' fresh cash injection, industry watchers said the shipbuilder will be hard pressed to implement self-rescue measures, worth 5.3 trillion won, through 2018. It has already sold off noncore assets and cut its workforce, through which it has raised or saved 1.8 trillion won.
For the year, the shipyard aims to cut its costs for workers by 25 percent to 640 billion won. It, moreover, is planning to cut its workforce to below 9,000 by 2018, and will try to sell more assets.
Meanwhile, the company is struggling to win more deals.
So far this year, the shipyard has secured $770 million worth of orders and aims to clinch orders worth as much as $5.5 billion.
The Geoje-based shipyard said earlier that its portfolio will be mostly made up of LNG carriers and other specialty vessels, with the company expecting a business turnaround this year.
Daewoo Shipbuilding said as of end-February its order backlog came to 108 ships, 50 of which are LNG-FSRU ships.