State pension fund set to decide on bailout scheme for Daewoo Shipbuilding

SEOUL, April 14 (Yonhap) -- The state-run National Pension Services (NPS), a major bondholder of Daewoo Shipbuilding & Marine Engineering Co., is set to decide later in the day on whether to accept the latest rescue plan for the shipyard, industry sources said Friday.

Late last month, the Korea Development Bank (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 has been at odds over the creditor-led rescue package asking for more concrete assessment reports from the creditors.

The NPS, which holds about 30 percent of bonds sold by Daewoo Shipbuilding, earlier demanded that KDB cover Daewoo Shipbuilding's debt maturing this month, although it withdrew it later.

The pension fund operator held a meeting earlier this week over whether to accept the debt-for-equity swap plan, but it made no decision, citing "doubts" over Daewoo Shipbuilding's financial situation.

The two main creditors -- the Korea Development Bank (KDB) and Export-Import Bank of Korea (EXIM Bank) -- have been pressing the NPS and other bondholders to accept the rescue plan for the world's largest shipyard by order backlog.

Daewoo Shipbuilding should pay off 440 billion won in corporate debt that matures next week, some 200 billion won of which is held by the NPS.

Of 1.35 trillion won in corporate bonds sold by Daewoo Shipbuilding, the NPS holds 388.7 billion won.

Daewoo Shipbuilding creditors have repeated that it is inevitable for Daewoo Shipbuilding to be put under a new form of court receivership, called a prepackaged plan, unless bondholders of the shipbuilder agree to a debt-for-equity swap plan.

Policymakers here are increasingly nervous about the possibility of Daewoo Shipbuilding facing the prepackaged plan, which will undermine 50,000 jobs and trigger massive cancellations of ships under construction.

Next week, bondholders of Daewoo Shipbuilding will gather on April 17-18. If they don't accept the debt rescheduling, the shipbuilder will be placed under the prepackaged plan.

sam@yna.co.kr
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