HHI Reveals Details of Its USD 3 Bn Self-Rescue Plan

After it received approval to carry out  its self-rescue plan from creditors, the South Korean shipbuilder Hyundai Heavy Industries (HHI) said that it intends to implement a KRW 3.5 trillion (USD 3.02 billion) worth management improvement plan by 2018.

In an effort to rebuild trust in the market, improve its balance sheet, and sharpen competitiveness, HHI expects to secure KRW 1.5 trillion with the sale of its shares of Hyundai Motor and KCC, its stakes in Hyundai Avancis, and certain properties and receivables.

The shipbuilder also plans to secure KRW 900 billion with an employee salary cut and work-sharing.

Furthermore, the company is aiming to obtain KRW 1.1 trillion with the spin-off and sell-off of a part of its business, and the reorganization of affiliated companies.

“We will duly implement the plan. In doing so, we will lay the solid foundation for taking off and rebuilding trust of our clients,” HHI said.

HHI is also considering a contingency plan that would provide it with an additional amount of KRW 3.6 trillion if needed.

Once the plan is in place, HHI expects that its liabilities-to-equity ratio will drop from the current 134% to 80% by 2018, and its total debt to be cut down by about KRW 2 trillion to KRW 6.6 trillion.

In an attempt to fight liquidity woes, HHI employed intensive reform measures, worth around KRW 3.9 trillion, which include the sale of corporate shares and treasury stocks, issuance of perpetual bonds, re-engineering of HHI’s portfolio to center more on its core businesses, and a restructure of its business organization by spinning off its industrial machinery business.

As a result of these measures, the company recorded a profit of KRW 325.2 billion in the first quarter of 2016, putting an end to a nine-quarter losing streak.

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