South Korea offered troubled Daewoo Shipbuilding & Marine Co. a new $6 billion bailout on Thursday, as the giant firm’s financial crisis worsens.
SEOUL: South Korea offered troubled Daewoo Shipbuilding & Marine Co. a new $6 billion bailout on Thursday, as the giant firm’s financial crisis worsens.
Daewoo is the world’s largest shipyard in terms of its order book and was previously given a 4.2 trillion won (US$3.8 billion) aid package in 2015.
It is majority-owned by state-owned banks. Previously it was a subsidiary of the now-defunct Daewoo Group, once the country’s second-largest conglomerate but which collapsed in the 1990s.
The shipbuilding unit survived, only for the sector to suffer turmoil of its own in the face of a global glut of vessels and ferocious price competition from China.
It suffered a 2.7 trillion won net loss last year, with its debts 27 times greater than its capital.
The 6.7 trillion won (US$6 billion) bailout envisages 2.9 trillion won in fresh loans from the Korea Development Bank (KDB), its largest shareholder and main creditor, and the Export-Import Bank of Korea, also a shareholder.
The money is conditional on other lenders and bondholders agreeing another 3.8 trillion won in debt-for-equity swaps and rollovers.
The new rescue plan sparked criticism that Seoul was backtracking on earlier promises to stop injecting fresh funds into Daewoo.
“We’re very sorry that we’ve failed to assess more conservatively the industry’s long-term slump and Daewoo’s latent downside risks,” said KDB CEO Lee Dong-Geol.
