Samsung Electronics intends to buy more shares of the financially struggling affiliate Samsung Heavy Industries (SHI), adding that the company will not abandon the shipbuilding business, The Korea Times reports.
Samsung will take part in SHI’s rights issue as a sign of belief in a positive turnaround after SHI carries out self-restructuring programs. The company did not disclose the exact number of shares it intends to buy. Samsung Electronics currently holds a 17.62% stake in SHI.
The shipbuilder plans to raise between KRW 1 and 1.3 trillion through the rights issue. As part of the restructuring process adopted by the Korea Development Bank (KDB) and the shipyard’s other creditors, SHI also intends to raise KRW 1.5 trillion through the sale of non-core assets, as well as to cut its workforce by 1,500.
SHI, which is reportedly on the brink of signing a USD 2.5 billion contract to build a floating LNG ship for Italy’s Eni, is not in danger of suffering liquidity issues in the next five years due to signs of market recovery and a rising demand for value-added vessels, according to a due diligence report recently submitted by Samjong KPMG to KDB.
“SHI’s top management was notified that the company’s self-rescue packages, including a plan to issue new shares, will keep the shipbuilder afloat,” a KDB official was quoted by The Korea Times as saying.
World Maritime News Staff