Report: NPS Agrees on DSME’s Debt Rescheduling Measures
The main debt holder of Daewoo Shipbuilding & Marine Engineering (DSME), South Korea’s National Pension Service (NPS), gave its nod to the ailing shipbuilder’s latest debt restructuring plan on April 17, Yonhap News Agency reported.
The decision on the new measures, which are expected to keep the financially troubled shipbuilder afloat, was made in “the best interest of the pension fund,” the NPS was cited as saying.
With the acceptance of the measures by NPS, which holds some 30 percent of the shipbuilder’s corporate bonds, other bondholders asked to share the burden of helping DSME might approve the debt rescheduling early this week.
Under the rescue plan half of the shipyard’s commercial papers are expected to be converted into equity with the rest being rolled over. DSME’s creditors Korea Development Bank (KDB) and Export-Import Bank of Korea (KEXIM) will in exchange provide the company with KRW 2.9 trillion (USD 2.6 billion) of fresh funds.
The creditors’ restructuring plan, revealed in late March 2017, sets out three key principles – debt restructuring should come first, financial assistance should follow later, and all stakeholders should bear the burden of losses.
DSME’s president Jung Sung-leep was earlier cited by Yonhap as saying that the company is expected to see a turnaround in the first quarter of the year. The president also informed that he is confident that the shipbuilder will report good business results for the remainder of the year.
In 2016 the shipbuilder suffered a net loss of KRW 2.7 trillion as its debt ratio soared to 2,732%. DSME had an order backlog of 114 vessels worth USD 34 billion as of the end of 2016. However, new orders last year amounted to mere USD 1.54 billion that fell far short of its previous estimate of USD 11.5 billion.
Last month, South Korea’s Financial Services Commission (FSC) informed that, according to auditors’ estimate, DSME could face a capital shortage of up to KRW 5.1 trillion over the next two years under a worst case scenario.
World Maritime News Staff