Daewoo Shipbuilding set to receive new loan later this month

Cash-strapped Daewoo Shipbuilding & Marine Engineering Co., a major shipyard here, is set to receive 500 billion won ($448 million) in fresh loans from its creditors later this month, industry sources said Wednesday.The financial aid, part of the second bailout fund drawn up by its creditors, will be spent on payments to subcontractors and to employees, they said.

In March, the creditors led by the KDB announced a fresh rescue package for the ailing shipbuilder that has been suffering from severe liquidity problems over heavy losses in its offshore projects.

Under the rescue package, Daewoo Shipbuilding receives new loans worth 2.9 trillion won, with lenders and bondholders swapping 2.9 trillion won of debt for new shares in the shipbuilder.

Bondholders will also give a three-year grace period for the repayment of the remaining debt.

In return, Daewoo Shipbuilding has pledged to implement self-rescue measures, worth 5.3 trillion won, through 2018. It has already sold off noncore assets and cut its workforce, through which it has raised or saved 1.8 trillion won.

Meanwhile, trading of Daewoo Shipbuilding may resume in October this year after its financial status improves, the sources said.

The trading of Daewoo Shipbuilding stocks have been halted since July last year, due to its impaired capital base.

Meanwhile, shareholders of Daewoo Shipbuilding approved a proposal to hike the ceiling of sales of convertible bonds to 4 trillion won from the current 2 trillion won, paving the way for the shipyard to receive fresh funding from its creditors.

With the debt-for-equity swap, Daewoo Shipbuilding's debt ratio will sharply fall to the 300 percent range from 2,732 percent at the end of last year. (Yonhap)