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.
