Is DSME Facing Delisting?
South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME), faced with risks of being delisted from the stock market due to capital erosion, is seeking measures for survival, says a report in Korea Times.
DSME has fallen into the state of complete capital impairment after taking a net loss of more than 1 trillion won in the second quarter. If this state continues until the year's end, the company's stock would be delisted from the market.
The company may be kicked out of the main bourse KOSPI if it fails to escape full-scale capital erosion.
The shipbuilder, which recorded a 423.6 billion won operating loss and 1.2 trillion won net loss in the second quarter, had its capital completely eroded with debts outweighing assets, as its total asset stood at 15.6 trillion won while its liability totaled 16.8 trillion won.
This means the bourse operator can delist the company, according to the listing rules. Hence, analysts have warned that DSME would inevitably be delisted from the stock market if it fails to get out of full-scale capital erosion by the end of this year.
In order for the company to avoid delisting, it must ask for a capital increase or a debt-for-equity swap with the creditors.
The shipbuilder and its creditors are considering recapitalization to avoid delisting. "Following the normalization plan, we are planning recapitalization within this year," the company announced. "The details of a capital increase such as the amount and timing will be discussed with creditors."
