Decision expected soon on Daewoo Shipbuilding bailout

Korea’s National Pension Service is expected
to decide soon whether to accept the latest rescue plan for Daewoo Shipbuilding and Marine
Engineering. If the plan is accepted, it will be the second
bailout for Korea’s once mighty shipbuilder. Hwang Hojun is watching the developments for
us. A decision is expected soon on whether the
troubled Daewoo Shipbuilding and Marine Engineering will get another lifeline. At a board meeting Friday, the National Pension
Service,… which holds 43 percent of Daewoo Shipbuilding bonds that are maturing next
month,… worth an estimated 170 million U.S. dollars,… is expected to determine whether
to accept a 5-point-8-billion U.S. dollar rescue plan proposed by the Korea Development
Bank and the Export-Import Bank of Korea late last month. Under the rescue package, Daewoo Shipbuilding
would receive new loans worth 2-point-5 billion dollars if lenders and bondholders agreed
to swap 2-point-5 billion dollars of debt for new shares in the shipbuilder. All stakeholders must agree to the debt-for-equity
swap, and bondholders must also give a three-year grace period for repayment of the remaining
debt. If the plan is approved, it will be the second
bailout for Daewoo,… currently the world’s second-largest shipbuilder by revenue. The shipbuilder has been suffering from severe
liquidity problems after a drop in global demand for vessels and other industry-wide
difficulties. Creditors say it’s inevitable that Daewoo
will be put under a new form of court receivership, called a prepackaged plan, unless the bondholders
agree to the debt-for-equity swap plan. If the shipbuilder is put under court receivership,
observers expect the aftermath will be brutal, as it could result in 50,000 jobs lost and
trigger massive cancellations of ships currently under construction. Daewoo Shipbuilding’s bondholders are expected
to gather next week to discuss the debt-to-equity swap and rollover plan. Hwang Hojun, Arirang News

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