Main creditor won't accept demands by NPS on Daewoo Shipbuilding debt rescheduling

SEOUL, April 10 (Yonhap) -- A state-run main creditor of ailing Daewoo Shipbuilding & Marine Engineering Co. said Monday that it will not accept demands by the state pension fund on debt rescheduling measures that aim to keep the shipyard afloat.

Joung Young-suk, head of corporate restructuring at Korea Development Bank (KDB), also repeated warnings that Daewoo Shipbuilding will be placed under a form of court receivership unless bondholders of the shipbuilder agree on a debt-for-equity swap plan.

The National Pension Service (NPS), which holds about 30 percent of bonds sold by Daewoo Shipbuilding, has demanded the KDB further slash the equity capital of the shipbuilder.

Among other demands, the NPS has asked the KDB to cover the debts of Daewoo Shipbuilding maturing this month.

"Our stance is that all (stakeholders) fairly shoulder losses (stemmed from Daewoo Shipbuilding)," Joung told reporters.

Joung said there is "no room" for the KDB to give in to the demands by the NPS.

Late last month, the KDB and another state-run creditor bank announced a fresh rescue package worth 6.7 trillion won (US$5.8 billion) for Daewoo Shipbuilding, but only if all stakeholders agree to a debt-for-equity swap plan.

The huge assistance 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.

The NPS held a meeting last week over whether to accept the debt-for-equity swap plan, but it made no decision, citing "doubts" over the financial situation of Daewoo Shipbuilding.

Of 1.35 trillion won worth of corporate bonds sold by Daewoo Shipbuilding, the NPS holds 388.7 billion won. In particular, the NPS holds about 45 percent of the 440 billion won worth of bonds maturing on April 21.

Unless the NPS accepts a debt-for-equity swap and other debt rescheduling measures, analysts say a rescue package for Daewoo Shipbuilding may not succeed.
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