DSME to Sell HQ Building as Part of Self-Rescue Efforts

In its latest attempt to fight liquidity woes, the financially-troubled South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME) decided to sell its Seoul headquarters building for a price of KRW 180 billion (USD 152 million).

The company entered into a leaseback agreement with Koramco REITs Management & Trust Co., under which the office would be sold and leased back on a long-term basis, DSME said.

Also included in its latest self-rescue plan is the further cut of its Seoul workforce, while the company plans to relocated some of the business departments to Geoje shipyard.

Furthermore, DSME is planning to dispose of its other asset in Magok, Seoul, which is estimated at more than KRW 200 billion. The sale is awaiting approval from the Seoul Metropolitan Government.

Last week, the shipbuilder revealed the additional self-restructuring plan amid the falling shipbuilding orders. The company’s creditors, led by the state-run Korea Development Bank, will now decide on the new self-rescue plan.

DSME also denied rumors on the sale of their naval business, however the company said that they are reviewing it.

The company managed to turnaround its net profit for the first quarter of 2016 recording KRW 31.4 billion (USD 2.7 million) against a loss of KRW 1.12 trillion in the previous quarter.

However, DSME’s operating profit remained in the red with an operating loss of KRW 26.3 billion (USD 23 million), missing analysts’ forecasts targeting profit of KRW 5.54 billion.

The expectation was based on the company’s major restructuring efforts including cost-cutting measures which are projected to bring about job cuts ranging from 12,000 to 30,000 by 2019. The cuts are expected to be implemented gradually across the board.

DSME reported a reduced full-year loss for 2015 worth KRW 3.31 trillion (USD 2.83 billion), substantially lower from KRW 5.13 trillion previously announced following an auditors’ review.

World Maritime News Staff

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