ِDSME Is Likely to Be A Bankrupt Firm
Daewoo Shipbuilding & Marine Engineering (DSME) has won further financial support worth KRW3.2trn ($2.7bn) from its creditors, but it still faces risk of falling under receivership if the shipyard’s labour union object to the conditions for accepting the fresh funds, reports said.
Korea Development Bank (KDB), DSME’s main creditor, and Export-Import Bank of Korea (Korea Eximbank) have agreed to help DSME with new debt swap and loan purchase deals, MANA correspondent reported.
KDB will convert KRW1.8trn of debt into equity, while Korea Eximbank will issue perpetual bonds worth KRW1trn to boost DSME’s capital. KDB has already offered KRW400bn for the shipyard in the form of a paid-in capital increase.
The support, however, is on condition that the labour union accept a wage freeze and job cuts, the local media reported.
DSME earlier said that it plans to let go of around 600 workers annually until 2020 to eventually reduce its workforce from 13,000 to 10,000.
“Given the grim management circumstances facing the DSME, the support by the KDB and Eximbank is no more than one of a host of requirements to attain for the continued push for the normalization (of the firm),” KDB said in a statement.
“Concerted efforts by labor and management and pain sharing are indispensable to ride out the crisis.”
If DSME is unable to get consent from the labour union for the business normalisation plans before the KDB board of directors meeting on 18 November, the financial support plan may be called off and DSME would risk falling under court receivership.