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Daewoo Shipbuilding in final stage of crafting self-restructuring program

All News 14:20 June 03, 2016

SEOUL, June 3 (Yonhap) – Embattled shipbuilder Daewoo Shipbuilding & Marine Engineering Co. is in the final stage of mapping out its self-restructuring scheme to raise some 5.2 trillion won (US$4.39 billion), more than the previously proposed 4 trillion won, after coming under pressure from creditors and financial authorities to plan a stronger rehabilitation scheme, industry sources said Friday.

Under the plan being crafted, Daewoo Shipbuilding intends to sell two of its five floating docks, which could translate into a 30-percent cut in its overall production facilities.

The scheme also calls for a further reduction in its workforce and a split-off of some its profitable business divisions for a stock market debut.

Last year the shipyard drew up a 1.85 trillion won self-rehabilitation plan in return for 4 trillion won in financial aid.

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

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

Its creditors, led by state-run Korea Development Bank, will review the additional self-rescue plans and decide whether to approve them sooner or later.

The second batch of self-rehabilitation steps comes as a drop in new orders is expected to continue down the road.

Other local rivals, such as Hyundai Heavy Industries Co., also promised to implement stronger self-rescue schemes to stay afloat.

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 industry-wide slump.

But a huge chunk of the loss, some 5.5 trillion won, came from Daewoo Shipbuilding.

sam@yna.co.kr
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