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DSME head visits Europe to calm shipowners' concerns

All Headlines 11:13 August 31, 2016

SEOUL, Aug. 31 (Yonhap) -- Cash-strapped Daewoo Shipbuilding & Marine Engineering Co. (DSME) on Wednesday said its president is visiting Europe in a bid to help dispel shipowning firms' concerns over its financial health.

Daewoo Shipbuilding said CEO Jung Sung-leep left Seoul for northern Europe on Monday to hold meetings with major shipowners, during which he will brief them on the company's current state and assure them that vessels and offshore platforms will be delivered without delay.

"Concern is growing among shipowners on news that creditors may downgrade their credit ratings on Daewoo Shipbuilding by one notch from normal," a company official said. "The trip is designed to dissipate such concern."

Jung will explain that ship construction is being carried out normally and there is no change in creditors' plan to help Daewoo Shipbuilding overcome its cash crunch, the official added.

Last week, the main creditor Korea Development Bank decided to provide a short-term loan of up to 300 billion won (US$268 million) to Daewoo Shipbuilding to help it address its liquidity shortage and repay maturing debts. The shipyard is required to repay commercial papers worth 400 billion won by Sept. 9.

Jung's tour to Europe comes 10 days after he visited Angola to discuss the delivery of two drill ships to the Angolan oil company Sonangol, which has been delayed due to "the situation of the shipowner."

In a regulatory filing on Aug. 17, Daewoo Shipbuilding said it will deliver the two drill ships worth 1 trillion won late next month, which is expected to help the shipyard fend off a liquidity crisis.

In mid-July, Jung visited Greece and other European countries, obtaining guarantees from top managers of shipowning companies there that they will make payments for vessels ahead of schedule, according to Daewoo Shipbuilding.

Stung by a global economic slowdown and a long-running slump in oil prices, South Korean shipbuilders, including Daewoo Shipbuilding, have been struggling with snowballing losses and plunging orders. In early June, creditors accepted the company's 5.3 trillion-won self-rescue plan, which the company says will enable it to tide over the cash crunch.

In the second quarter of this year, Daewoo Shipbuilding posted a net loss of 1.22 trillion won, a turnaround from a profit of 31.4 billion won three months earlier.

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