S.Korea Shipbuilders' Lead creditors back Asset Sale, Cost Cuts
The lead creditors of two of South Korea's biggest shipbuilders have provisionally approved plans by Hyundai Heavy Industries and Samsung Heavy Industries to raise up to $4.2 billion in asset sales and cost cuts, people with knowledge of the plans said on Wednesday.
The fund-raising moves come as a downturn in the global shipbuilding industry, depressed by a drop in orders from the oil industry because of lower crude prices, push the firms into heavy losses. The world's top three shipbuilders, all South Korean, reported combined net losses of $4.9 billion in 2015.
Two people with direct knowledge of the matter said Hyundai Heavy's lead creditor, KEB Hana Bank, has provisionally backed the firm's plans to sell up to 2.7 trillion won in non-core assets by 2018 and save up to 800 billion won in costs, if needed, to cut debt.
The people declined to be identified as the plans were confidential and subject to change.
According to plans Hyundai Heavy submitted to the bank, it could raise up to 1.5 trillion won by selling real estate and stock holdings, including a subsidiary's stake in unlisted stock brokerage HI Investment & Securities. It could also raise up to 1.2 trillion won by selling non-core businesses such as robot and solar energy divisions.
Hyundai Heavy said KEB Hana Bank approved its provisional asset sale plan, but declined to give details. KEB Hana Bank declined to comment.
Meanwhile, Samsung Heavy's lead creditor, Korea Development Bank, provisionally approved a plan to generate up to 1.5 trillion won via cost savings and asset sales, a separate person with direct knowledge of the matter said.
Samsung Heavy declined to comment. Korea Development Bank said it provisionally approved Samsung Heavy's plan, but declined to give details.
Reporting by Joyce Lee