Daewoo Shipbuilding labor union pressed to present written pledge for 'no strike'

Published : Mar 31, 2017 - 10:16 Updated : Mar 31, 2017 - 14:21

Creditors of cash-strapped Daewoo Shipbuilding & Marine Engineering Co. have asked the shipyard's labor union to submit a written pledge not to launch any strikes in protest over bold restructuring moves, industry sources said Friday.

The creditors, led by the state-run Korea Development Bank, demanded that the union present the written pledge by the end of next week, which they see as leverage to pressure corporate bondholders and commercial lenders to join a 6.7 trillion won ($5.98 billion) rescue package for the embattled shipbuilder, including a massive debt-for-equity swap and three year grace period on remaining debts.

(Yonhap)

Last week, the KDB-led creditors announced a fresh rescue package for the ailing shipbuilder, but only if all stakeholders agree to a debt-for-equity swap plan.

The huge rescue 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.

Bondholders are also required to give a three-year grace period to the repayment of the remaining debt.

Daewoo Shipbuilding is also required to cut 25 percent of its personnel costs and slash its workforce by 1,000. The fresh rescue package also calls for the labor union of Daewoo Shipbuilding not to stage a strike.

Earlier, the labor union said that it is willing to accept a proposed pay cut for workers from the shipyard's creditors.

Jung Sung-leep, president of Daewoo Shipbuilding, also urged the company's workers earlier this week to share the "pain," adding that he will return 100 percent of his salary as part of a drive to cut costs.

Meanwhile, Daewoo Shipbuilding said it suffered a net loss of 2.79 trillion won last year and an operating loss of 1.53 trillion won. For 2016, its sales reached 12.82 trillion won. (Yonhap)