Korea to Inject $2.64 bln into DSME
South Korea's state-run banks are expected to raise more than 3 trillion won (US$2.64 billion) to prevent Daewoo Shipbuilding and Marine Engineering (DSME) from being delisted, reports Korea Herald.
Korea Development Bank and the Export-Import Bank of Korea are planning to raise funds within the 4.2 trillion won limit set in October 2015 to keep the shipbuilder listed on the local market
Both are reportedly planning to draw up detailed plans within the month. The funds will be injected into the ailing shipbuilder through debt-equity swap or by purchasing newly issued shares.
Meanwhile, Pulse reported that despite a recent outside audit report questioning the viability of DSME, the Korean government along with the banks are determined to turn the shipbuilder around instead of sending it to the bankruptcy court for reorganization.
According to sources the two state lenders will convert their outstanding loans – KDB’s 1.8 trillion won ($1.6 billion) and the Export-Import Bank of Korea’s 1.1 trillion won – into equity in the shipbuilder within the year to reduce the debt load.
The loans were part of the 4.2 trillion won rescue funds arranged by policymakers in October last year, making the debt-to-equity conversion an extension of public bailout.