South Korea's Daewoo Shipbuilding & Marine Engineering Co (DSME) is accelerating its move to sell all non-core assets o beef up its financial status amid concerns over a sharp fall in new orders, Yonhap reported quoting industry sources.
DSME has recently signed a memorandum of understanding (MoU) to sell its building in downtown Seoul, a deal valued at US$30 million, the report said. The shipbuilder also put one of its affiliates up for sale, whose price tag is set at some 18 billion won, with the two cases of asset sales expected to be completed by April.
Adverse conditions like lack of new orders and worsening financial conditions. Creditors of are reportedly mulling an option to provide additional assistance to the cash-strapped company.
The creditors, led by the state-run Korea Development Bank
, announced a rescue package worth 4.2 trillion won in October 2015 for Daewoo Shipbuilding, on expectations that the shipbuilder would clinch up to $12 billion worth of orders last year, and the delivery of newly built ships would go smoothly.
But things turned out to be worse than expected. Last year, Daewoo Shipbuilding bagged a meager $1.55 billion worth of new orders, and the delivery of two drilling rigs worth 1 trillion won, originally scheduled for early last year, has been delayed to this year due to a customer's worsening financial status.
Consequently, the shipbuilder failed to secure some 3 trillion won in cash last year. Usually, a shipbuilder receives up to 20 percent of contracts as down payments.