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State pension fund to decide on debt rescheduling for Daewoo Shipbuilding this week

All News 09:12 April 10, 2017

SEOUL, April 10 (Yonhap) -- The National Pension Service (NPS), the largest holder of bonds sold by troubled Daewoo Shipbuilding & Marine Engineering Co., will decide this week on whether to accept a debt rescheduling for the shipyard, industry sources said Monday.

The NPS holds about 30 percent, or 389 billion won (US$342 million), out of 1.35 trillion won worth of corporate bonds issued by Daewoo Shipbuilding.

In particular, the NPS holds about 45 percent of 440 billion won worth of the bonds maturing on April 21.

Unless the NPS accepts a debt-for-equity swap and other debt rescheduling measures, a rescue package for Daewoo Shipbuilding may fall through.

Late last month, state-run creditor banks announced a fresh rescue package worth 6.7 trillion won for the shipyard, 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.

Under the rescue package, Daewoo Shipbuilding will receive new loans worth 2.9 trillion won if lenders and bondholders agree to swap 2.9 trillion won of debt for new shares in the shipbuilder.

Bondholders are also required to give a three-year grace period to the repayment of the remaining debt.

State pension fund to decide on debt rescheduling for Daewoo Shipbuilding this week - 1

The NPS, other key debt holders and commercial lenders are urging the state-run Korea Development Bank (KDB) and the Export-Import Bank of Korea to offer more favorable conditions for them, claiming that the rescue package is largely in favor of the state banks.

So far, the KDB has been reluctant in making compromises with commercial lenders and bondholders on some sticky issues.

The NPS' stance is very crucial because other corporate bondholders are widely expected to follow the state fund's steps.

Bondholders are set to hold a two-day meeting where they will decide whether to accept the debt rescheduling for the world's largest shipyard by order backlog.

The KDB-led creditors are threatening to implement a harsher plan for Daewoo Shipbuilding that will eventually lead to more losses for bondholders if the proposed rescue plan is not approved.

The KDB said nonstate lenders will present a written pledge this week for the debt rescheduling that they will swap 560 billion won worth of loans into Daewoo Shipbuilding's stocks and allow the shipyard to postpone the repayment of some 140 billion won by three years.

State pension fund to decide on debt rescheduling for Daewoo Shipbuilding this week - 2


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