DSME Deal Non-starter
The creditors of Daewoo Shipbuilding & Marine Engineering (DSME) still remain undecided over afor the shipyard's latest deal, further complicating troubles for one of the country's major shipyards, Yonhap reported.
DSME clinched a US$250 million deal to build three very large crude carriers (VLCCs) on April 4. Under the deal with Maran Tankers Management, a unit of Greece's largest shipper Angelicoussis Shipping Group, Daewoo Shipbuilding will deliver the 318,000-ton VLCCs by 2018.
The deal came as the shipyard is suffering from a sharp decline in new orders amid a protracted industrywide slump.
"We are still talking about (this), and the state-run creditors and commercial lenders have to narrow their differences on the terms," a source said, asking not to be named.
Another report said that the troubled company has to implement bold self-restructuring efforts and win more shipbuilding deals at reasonable prices in order to stand on its own feet, as its creditors are set to inject another batch of cash into the shipyard soon, analysts said Saturday.
Holders of bonds and commercial papers sold by the shipyard, the world’s largest by order backlog, worth 1.55 trillion won ($1.36 billion) in total, have signed off on a massive debt-for-equity swap deal drawn up by creditors led by the state-run Korea Development Bank (KDB).
The arrangement that also includes a delay in debt payments effectively cleared the last hurdle for the cash-hungry shipbuilder to move forward.
Meanwhile Business Korea said that even though DSME (DSME) completed its debt rescheduling, the financial sector came to bear a bigger burden.
According to the banking sector on March 19, five commercial banks — KEB Hana Bank, KB Kookmin, Woori Bank, NH Bank, and Shinhan Bank –- will conduct a fair evaluation in June following a debt-for-equity swap of DSME.
The evaluation will be carried out with an external accounting firm and the accounting firm will be selected through consultations with five banks with the Korea Development Bank (KDB) and the Korea Export-Import Bank (Eximbank) taking the lead. The KDB and the Eximbank swapped all DSME debts they held for equity.
Questions have risen over the government’s stance on support for DSME, as the Financial Services Commission (FSC) has started denying it designed the bailout plan, said a report in Korea Times.
The cash-strapped shipbuilder is likely to escape its liquidity crisis, as corporate bondholders agreed this week to a debt rescheduling program in which they will get a debt-for-equity swap for half of their bonds and will roll over the repayment of the other half for three years.
