The European Union and Japan have raised concerns over Daewoo Shipbuilding & Marine Engineering’s (DSME) rescue plan as the shipbuilder secured the necessary approvals for the aid, according to Yonhap News Agency.
Namely, the South Korea’s latest restructuring plan for the ailing shipbuilder was approved by DSME’s main debt holder, National Pension Service (NPS), which holds some 30 percent of the company’s corporate bonds, on April 17. Later the same day, the company’s remaining investors gave their nod to the debt rescheduling proposal, paving way for the shipbuilder’s recovery.
If the new measures receive court approval, DSME’s main creditors Korea Development Bank (KDB) and Export-Import Bank of Korea (KEXIM) would provide a KRW 2.9 trillion loan to the shipbuilder starting in late April.
The new measures would see half of the shipyard’s commercial papers converted into equity with the rest being rolled over.
The latest restructuring plan, revealed in late March 2017, sets out three key principles – debt restructuring should come first, financial assistance should follow later, and all stakeholders should bear the burden of losses.
Despite earlier efforts made by KDB and KEXIM in October 2015, when the duo injected a KRW 4.2 trillion rescue package into DSME, and the company’s self-rescue efforts including workforce reduction and asset sales, the shipbuilder suffered a net loss of KRW 2.7 trillion last year as its debt ratio soared to 2,732%.
Conditions surrounding the shipbuilder continuously deteriorated with a deepening slump in the industry and a sharp fall in new orders.
DSME had an order backlog of 114 vessels worth USD 34 billion as of the end of 2016. However, new orders last year amounted to mere USD 1.54 billion that fell far short of its previous estimate of USD 11.5 billion.
World Maritime News