Daewoo Shipbuilding & Marine Engineering has been hurt by massive losses at its offshore projects.
SEOUL—Daewoo Shipbuilding & Marine Engineering Co.’s state-run creditors on Thursday unveiled a 2.9 trillion won ($2.6 billion) rescue package for the South Korean shipbuilder, which has been hurt by massive losses from its offshore projects.
The bailout is the latest example of the global shipbuilding industry’s difficulties, as a glut of vessels and low freight rates put many shipyards in financial trouble in recent years. An economic slowdown in China has made things worse for the world’s three biggest shipyards, which are all in South Korea.
Korea Development Bank and Export-Import Bank of Korea said they would provide funds to improve Daewoo’s cash flow and convert its liabilities into equity to cut debt.
The two state-run banks had already provided a combined 4.2 trillion won in aid to the cash-strapped shipyard in 2015.
“In return for this rescue package, we’ll implement rigorous restructuring at the shipbuilder, including deep job cuts and sale of nonprofitable businesses,” said KDB, Daewoo’s largest shareholder and main creditor.
