Creditor calls for Samsung Heavy’s self-rescue plan

The main creditor bank of Samsung Heavy Industries has called on the shipbuilder to come up with self-rescue measures, in a move to speed up the government’s push in restructuring of the embattled shipbuilding segment hit by mounting losses and an industrywide slump, sources said Tuesday.

The state-run Korea Development Bank officially demanded that Samsung Heavy submit self-restructuring plans on April 29, which could lead to job cuts and sales of noncore assets.

“KDB asked (the firm) to map out a course for improvements on management and financial health as well as plan for liquidity issues,” an official at Samsung Heavy Industries told The Korea Herald. He said the creditor did not set a due date for the submission.

The decision puts more pressure on Samsung Heavy which has been voluntarily carrying out workforce reduction and downsizing as part of efforts to stay afloat. So far, some 1,500 workers, or 10 percent of total employees, have left the company over the past two years.

The company also secured 100 billion won ($87.9 million) worth of liquidity via sales of properties including a plant in Dangjin, South Chungcheong Province.

“The government and creditors have no choice but to examine (shipyards) carefully, given the local shipbuilding industry’s falling order backlog,” an official at financial authorities said.

With the latest move by KDB, all of the Korea’s big three shipbuilders -- Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering – are expected to face imminent creditor-led restructuring after the government pledged to take active measures to help the nation’s troubled shipping and shipbuilding sectors.

On April 28, KEB Hana Bank CEO Ham Young-joo requested Hyundai Heavy Industries CEO Kwon Oh-Gap to prepare for restructuring measures in a preemptive measure to counter possible further deterioration of the industry.

The trio has secured orders for just five new ships this year by the end of April, reaching 1.4 percent of their 42.8 billion won order target for 2016.

Daewoo Shipbuilding, which highlighted the crisis by posting 3.8 trillion won of net losses last year, will undergo stress to examine its financial soundness for further cost-cutting efforts.

Daewoo Shipbuilding earlier said it will cut its workforce by 2,300 to roughly the 10,000-level by 2019.

The three industry players suffered combined losses of 7.7 trillion won last year, as their higher-margin offshore energy projects were hit by order cancellations and delivery delays due to low oil prices.

By Park Han-na (hnpark@heraldcorp.com)