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(LEAD) Hyundai Heavy gets approval on 3.5 tln-won self-rescue measures

All News 14:02 June 01, 2016

(ATTN: ADDS details in paras 7-10)

SEOUL, June 1 (Yonhap) -- Embattled Hyundai Heavy Industries Co. has mapped out 3.5 trillion won (US$2.94 billion) worth of self-rehabilitation measures, including asset sales and a cut in its workforce, in order to stay afloat amid a drop in new orders, industry sources said Wednesday.

Under the shipbuilder's self-rescue plans, temporarily approved by the financial authorities and its creditors, led by KEB-Hana Bank, it will sell stocks that it invested in, non-core assets and cut its workforce, which will reduce its debt-to-equity ratio to below 100 percent by 2018.

As of end-March, the shipbuilder's debt stood at 8.5 trillion won, with its debt ratio standing at 134 percent.

Since September 2014, Hyundai Heavy has already implemented self-rescue measures worth 3.9 trillion won.

The shipbuilder swung to the black in the first quarter for the first time in 10 quarters with an operating income of 325 billion won, aided by its stronger restructuring efforts.

Its local rivals -- Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -- have submitted their own self-rehabilitation measures to their creditors.

Loss-making Daewoo Shipbuilding has proposed self-rescue measures worth over 4 trillion won in total that include an employee wage cut and asset sales. Last year the shipyard drew up a 1.85 trillion-won self-rehabilitation plan in return for 4 trillion won in financial aid. Recently, the shipyard presented an additional step estimated to save 2 trillion won, according to the sources.

The latest measures include a cut of up to 20 percent in wages to its employees and a further reduction in the number of executives.

Daewoo Shipbuilding plans to advance the timetable for a workforce reduction. Earlier the company said it would slash its workforce by 2,300 by the year 2019. Last month, the shipyard named a preferred bidder to sell its headquarters building in downtown Seoul for 180 billion won.

Samsung Heavy is also in talks with its creditors over its self-rescue plans worth 1.5 trillion won, but the sources said its creditors, led by KDB, reportedly want stronger steps.

The country's top three shipyards suffered a combined operating loss of 8.5 trillion won last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump.

sam@yna.co.kr
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