Daewoo Shipbuilding & Marine Engineering bondholders have approved a debt-for-equity swap as a condition of a 2.9 trillion won funding package from the Korea Development Bank and Export-Import Bank of Korea.
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Struggling South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) will receive a 2.9 trillion won (U.S. $2.6 billion) bailout package from the Korea Development Bank (KDB) and Export-Import Bank of Korea (KEXIM).
Struggling shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) will receive a 2.9 trillion won (U.S. $2.6 billion) funding package from the Korea Development Bank (KDB) and Export-Import Bank of Korea (KEXIM), according to multiple media reports.
DSME bondholders approved a debt-for-equity swap that was set as a condition of the bailout announced late last month.
Over the course of several meetings earlier this week, DSME reportedly won approval from 96 percent of bondholders shortly after getting the green light from the company’s biggest bondholder, South Korea’s National Pension Service.
DSME CEO Jung Sung-leep has pledged to use the funds to restructure the firm in an effort to regain profitability following a disastrous 2016 in which tepid global trade growth and historically low oil prices put massive pressure on the global shipbuilding industry.
“We will normalize the company as soon as possible through bone-grinding effort, so you (bondholders) can come to think you made a good choice for yourselves, the company and the economy,” Sung-leep said in a statement, according to a report from Reuters news service.
Reuters said the bailout package, in addition to a 4.2 trillion won funding injection that began in late 2015, is the biggest state-backed rescue of a single company by South Korea in more than tens years, according to state bank officials.
The new funds will be used for continuing operations, as well as to allow commercial lenders to issue refund guarantees to shipowners, without which order contracts are voided.
In addition, the money will allow DSME to continue building the 108 ships on order as of February and deliver the vessels on time. Nearly all of the firm’s existing orders are scheduled for deliver in 2017 or 2018, a DSME spokesman reportedly told Reuters.
DSME in 2016 reported a loss of 2.7 trillion won compared with 3.3 trillion won loss the previous year.
