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(LEAD) NPS says it is moving to find 'common ground' with Daewoo Shipbuilding creditors

All News 14:17 April 14, 2017

(ATTN: CHANGES headline, lead; ADDS more details in paras 2-9)

SEOUL, April 14 (Yonhap) -- The chief investment officer of the state-run National Pension Services (NPS), said Friday that the largest bondholder of troubled Daewoo Shipbuilding & Marine Engineering Co. is moving to find "common ground" with creditors of the cash-hungry shipyard in negotiations over the latest rescue plan for the shipyard.

Late last month, the Korean 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, however, has been at odds over the creditor-led rescue package demanding more concrete assessment reports from the creditors as time has run out for the shipyard's salvage, raising the possibility of the company being put under a near court receivership.

"The KDB, as the main creditor, has shown a strong will to get the shipyard back to normal," Kang Myun-wook, the CIO of the NPS, said. "There was common ground (with the creditors)."

On Thursday, Kang held a meeting with Lee Dong-geol, the chief of KDB, to discuss the issue, according to the NPS.

The NPS will hold a meeting later in the day to decide on whether to accept the KDB's proposal.

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

The two main creditors -- the Korea Development Bank (KDB) and Export-Import Bank of Korea (EXIM Bank) -- also rejected calls from the NPS to allow it to conduct due diligence on the world's largest shipyard by order backlog.

Daewoo Shipbuilding should pay off 440 billion won in corporate debts that mature next week, some 200 billion won of which are held by the NPS.

Of 1.35 trillion won worth of 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 on 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 cancellation 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.

(LEAD) NPS says it is moving to find 'common ground' with Daewoo Shipbuilding creditors - 1
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