Holders of Daewoo Shipbuilding commercial papers expected to agree on bailout plan

SEOUL, April 18 (Yonhap) -- South Korea's top financial regulator said Tuesday he expects holders of commercial papers issued by Daewoo Shipbuilding & Marine Engineering Co. to agree to a debt-for-equity swap plan by the end of this week.

If they accept the bailout plan, state-run creditor banks will begin injecting fresh funds into Daewoo Shipbuilding to keep the ailing shipbuilder afloat, Financial Services Commission Chairman Yim Jong-yong told reporters.

Yim made the remarks after Daewoo Shipbuilding received final approval from its bondholders for the painful debt-for-equity swap plan earlier in the day, clearing a key hurdle to receive the fresh funds.

"If there is an agreement from holders of commercial papers, a fresh cash injection for Daewoo Shipbuilding & Marine Engineering will be implemented," Yim said.

Late last month, state-run creditor banks announced a fresh rescue package worth 6.7 trillion won (US$5.8 billion) for Daewoo Shipbuilding, but only if all stakeholders agree on the modification of the terms of the loan.

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.
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