South Korea's chief financial regulator said Tuesday it will oversee whether the restructuring efforts by the country's debt-laden shipbuilders will go as planned in efforts to ratchet up pressure on them to carry out their promised overhaul moves.
Financial Services Commission Chairman Yim Jong-yong will chair a bi-weekly meeting, starting from this week, to closely monitor local shipbuilders' self-rescue plans and their implementation, an FSC official said.
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(Yonhap) |
Government officials and the main creditor banks of the three financially-troubled shipyards -- Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -- will meet to take a closer look at every development of restructuring in the builders, the official said.
"In the first meeting, the chairman plans to underline that the shipbuilders should thoroughly complete their promised self-help measures, including job cuts and asset sales, to avoid being placed under court receivership," he said.
The three builders have recently drawn up a combined 10.35 trillion won ($8.8 billion) worth of rehabilitation programs to tide over a protracted slump and mounting losses. Last week, their creditors gave the go-ahead to the programs.
Under the programs worth 10.35 trillion won, the three have to reduce 20 percent of their overall production facilities and cut 30 percent of their workforce in the coming two and a half years. The strict programs came based on the projection that their combined new orders in the next three years will plunge by up to 50 percent compared to the average of $14 billion in the 2010-2015 period, the FSC said.
The shipyards are required to submit their detailed action plans by next week to their creditors, it said.
Shipbuilders have been under severe financial strain in the face of falls in new orders since the 2008 global economic crisis due to a glut of vessels and a tougher competition with Chinese rivals.
The Big 3 suffered a collective operating loss of 8.5 trillion won last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump. A huge chunk of the loss, some 5.5 trillion won, came from DSME.
Meanwhile, the DSME's unionized workers cast a vote on a possible strike in protest of massive potential layoffs as a result of restructuring.
On Tuesday, its main creditor Korea Development Bank warned, "If Daewoo Shipbuilding workers go on strike, there will be no financial aid to help put its business back on track."
The voting results have yet to be released by the union. (Yonhap)
