Baku, November 3, AZERTAC/Yonhap
Daewoo Shipbuilding & Marine Engineering Co., a major shipyard here, plans to raise an additional 700 billion won (US$609 million) through asset sales this year, raising the total amount prepared as part of its self-rescue measures to 6 trillion won (US$5.22 billion), since it is widely expected to miss its annual new order target, its chief said Wednesday, according to Yonhap.
Previously, Daewoo Shipbuilding said it would implement a 5.3 trillion won self-rehabilitation scheme to tide over a protracted industry-wide slump and curb widening losses.
"I expect this year's new orders to be between $2 billion and $2.5 billion," Daewoo Shipbuilding chief executive Jung Sung-leep said in a press conference Wednesday. "In that context, we are implementing a 6 trillion won self-rescue plan."
Earlier, the shipyard expected this year's new orders to hit some $10 billion, but a drop forced the shipbuilder to sell more assets.
Jung said Daewoo Shipbuilding will focus on its money-making business while curtailing the offshore facility-related business.
"If next year's new orders fall short of $5 or $6 billion, we may face difficulty in repaying maturing debt, but we are working on a variety of measures to avoid such a scenario."
Meanwhile, its creditors, led by the state-run Korea Development Bank, are set to announce a debt-for-equity swap and other measures, worth 3 trillion won, for the embattled shipbuilder next week, to help one of the country's big three shipyards avoid possible delisting from the local stock market.
The country's two policy lenders -- the KDB and the Export-Import Bank of Korea (EXIM Bank) -- have said they would provide a combined 4.2 trillion won in financial aid to Daewoo Shipbuilding, which breaks down to 2.6 trillion won from KDB and 1.6 trillion won from the other lender.
The financial support includes a debt-for-equity swap and the purchase of stocks to be issued by the shipbuilder.
In the first half of the year, Daewoo Shipbuilding suffered a net loss of 1.19 trillion won with its debt ratio exceeding 7,000 percent.
South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.
The country's top three shipyards -- Hyundai Heavy Industries, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. -- suffered a combined operating loss of 8.5 trillion won last year. The loss was due largely to increased costs stemming from a delay in the construction of offshore facilities and an industry-wide slump, with Daewoo Shipbuilding alone posting a 5.5 trillion won loss.
The shipbuilders have recently drawn up sweeping self-rescue programs worth 10.35 trillion won in a desperate bid to overcome the protracted slump and mounting losses.