DAE­WOO GETS BIG LIFE­LINE

World’s largest ship­yard in terms of or­der book to re­ceive 6.7tril won govt bailout

New Straits Times - - Business -

SEOUL of its own in the face of a global glut of ves­sels and price com­pe­ti­tion from China.

It suf­fered a 2.7 tril­lion won net loss last year, with its debts 27 times greater than its cap­i­tal.

The 6.7 tril­lion won bailout en­vis­ages 2.9 tril­lion won in fresh loans from the Korea De­vel­op­ment Bank (KDB), its largest share­holder and main cred­i­tor, and the Ex­port-Im­port Bank of Korea, also a share­holder.

The money is con­di­tional on other lenders and bond­hold­ers agree­ing another 3.8 tril­lion won in debt-for-eq­uity swaps and rollovers.

The new res­cue plan sparked crit­i­cism that Seoul was back­track­ing on ear­lier prom­ises to stop in­ject­ing fresh funds into Dae­woo.

“We’re very sorry that we’ve failed to as­sess more con­ser­va­tively the in­dus­try’s long-term slump and Dae­woo’s la­tent down­side risks,” said KDB chief ex­ec­u­tive of­fi­cer Lee Dong-Geol.

Dae­woo was in “crit­i­cal” fi­nan­cial con­di­tion and would face in­sol­vency next month, when it had to re­pay large cor­po­rate bonds, un­less “strong and com­pre­hen­sive mea­sures” were taken, he said.

Econ­o­mist Chun Seong-In at Hongik Univer­sity lam­basted the fi­nance min­istry for be­ing “in­con­sis­tent, be­lated and un­fair” in its deal­ings with the com­pany, which has more than 10,000 em­ploy­ees.

The min­istry “missed a chance for a rad­i­cal cor­po­rate re­struc­tur­ing” in 2015, forc­ing the gov­ern­ment to in­ject ad­di­tional funds, he said.

Dae­woo Ship­build­ing’s for­mer head Ko Jae-Ho was in Jan­uary sen­tenced to 10 years in pri­son for ma­nip­u­lat­ing the com­pany’s books in 2013 and 2014, and us­ing them to raise bank loans.

In­vestors sus­tained se­ri­ous fi­nan­cial losses as the com­pany’s credit rat­ings and stocks plunged af­ter the win­dow-dress­ing came to light. AFP

BLOOMBERG PIC

Dae­woo Ship­build­ing & Ma­rine En­gi­neer­ing Co suf­fered a 2.7 tril­lion won net loss last year, with its debts 27 times greater than the con­glom­er­ate’s cap­i­tal.

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