Experimental feature

Listen to this article

Experimental feature

South Korea’s government on Thursday announced a fresh Won2.9tn ($2.6bn) financial support for cash-strapped Daewoo Shipbuilding and Marine Engineering as the world’s second-largest shipbuilder continued to suffer huge losses amid a prolonged industry slump.
The new rescue package will be led by state-run banks – Korea Development Bank and Export Import Bank of Korea – to help Daewoo tide over its deepening financial crisis while other creditors will also be asked to provide support through debt-to-equity swaps and debt rollovers.

The additional support comes a year and five months after the company was thrown a Won4.2tn lifeline to rescue the troubled shipbuilder, despite growing criticism that the continued aid would send a wrong signal of “too big to fail” to the market.

Daewoo reported a Won2.7tn net loss last year from a Won3.3tn loss in 2015 with sales dropping 15 per cent to Won12.7tn. It is struggling to pay back Won940bn in maturing bonds this year including Won440bn next month amid a dearth of new orders and delayed deliveries of offshore oil rigs.

The company received a meagre $1.6bn worth of new orders last year, far short of its $6.2bn target. This year, it aims to win $5.5bn of new orders but has received just $520m of new orders so far to build two LNG (liquefied natural gas) ships and VLCCs (Very Large Crude Carriers).

Copyright The Financial Times Limited 2017. All rights reserved.

Follow the topics mentioned in this article

Follow the authors of this article

Comments have not been enabled for this article.