Go to Contents Go to Navigation

Creditors undecided on refund guarantee for Daewoo's latest deal

All Headlines 10:28 April 05, 2017

SEOUL, April 5 (Yonhap) -- Creditors of Daewoo Shipbuilding & Marine Engineering Co., a troubled shipbuilder here, remain undecided over a refund guarantee for the shipyard's latest deal, further complicating troubles for one of the country's major shipyards, industry sources said Wednesday.

Earlier this week, Daewoo Shipbuilding clinched a US$250 million deal to build three very large crude carriers (VLCCs).

Under the deal with Maran Tankers Management, a unit of Greece's largest shipper, Angelicoussis Shipping Group, Daewoo Shipbuilding will deliver the 318,000-ton VLCCs by 2018.

The deal came as the shipyard is suffering from a sharp decline in new orders amid a protracted industry-wide slump.

According to the sources, Daewoo Shipbuilding's creditors may decide who will issue the refund guarantee for the shipyard as its corporate bondholders are set to hold a meeting on April 17 over whether to accept a massive debt rescheduling scheme for the embattled shipyard.

Creditors undecided on refund guarantee for Daewoo's latest deal - 1

Last month, the creditors, led by state-run Korea Development Bank, announced a fresh rescue package worth 6.7 trillion won for the ailing shipbuilder, but only if all stakeholders agree to a debt-for-equity swap plan.

The huge rescue measures represent the second round of bailouts for the shipbuilder that has been suffering from severe liquidity problems over heavy losses in its offshore projects.

A refund guarantee issued by a shipyard's bank is important for a ship owner when ordering a new vessel. If the shipyard defaults, the bank's refund guarantee provides the ship owner with the money already paid. Without a refund guarantee, winning a new deal is almost impossible for a shipyard.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.

"After the bondholders meeting, the creditors may decide (on the refund guarantee for Daewoo Shipbuilding)," said a source.

The KDB has issued 4 trillion won in refund guarantees, and the Export-Import Bank of Korea, another policy lender, has put up over 8 trillion won in refund guarantees for local shipyards.

Creditors undecided on refund guarantee for Daewoo's latest deal - 2

sam@yna.co.kr
(END)

HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!