South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) intends to raise an additional KRW 700 billion (USD 612 million) through asset sales in 2016, as the shipbuilder expects to add up to five times less orders to its order book this year than initially projected, Yonhap News Agency reports.
This year’s new orders are expected to be between USD 2 billion and USD 2.5 billion. The amount is much lower now than USD 10 billion DSME previously expected to receive in new orders.
With the new measure, DSME would raise a total of KRW 6 trillion (USD 5.25 billion) through its self-rescue plan.
The cuts will be made mainly in the company’s offshore-related businesses, with DSME focusing on money-making businesses, Yonhap cited DSME’s CEO, Jung Sung-leep, as saying.
The shipbuilder’ creditors, led by the state-run Korea Development Bank, are reportedly set to announce a debt-for-equity swap and other measures worth KRW 3 trillion, for the financially-troubled shipbuilder next week, to prevent DSME’s delisting from the stock market.
South Korea’s two policy lenders, the KDB and the Export-Import Bank of Korea (EXIM Bank), would provide a combined KRW 4.2 trillion in financial aid to DSME.
During the first half of the year, South Korea’s Big Three shipbuilders including DSME, Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI) cut their joint workforce by some 5,000 workers amid the global oversupply and the lack of demand in the shipbuilding industry. The companies initially planned to cut their combined workforce by up to 6,000 in 2016, however, earlier reports noted that this number could be even larger given the persistent slowdown in the shipbuilding industry.
In March, DSME revealed its plans to slash its workforce by 12,000 to 30,000 by 2019 as part of its cost-cutting measures.
World Maritime News Staff