DSME’s union bows to its creditors’ demands

DSME’s union bows to its creditors’ demands

Daewoo Shipbuilding & Marine Engineering (DSME) could be about to get extra funds from its creditors after the shipyard’s union agreed to self-secure plans, reports say.

Korea Development Bank, one of DSME’s key creditors, had warned that there will be no financial support unless the shipyard submit a letter of consent by Monday calling for a wage freeze, no strikes until the company is normalised and other measures, South Korea’s Yonhap news agency reports.

The bank and other creditors have been devising a rescue plan for the shipyard that will likely include an injection of additional funds from its creditors, plus a $5bn refund guarantee on advance payments made to DSME in a deal brokered this month by Choi Kyoung-Hwan, South Korea’s deputy prime minister.

“We made a final decision to submit a letter of consent to the creditors,” Hyun Si-han, the union’s head, told Yonhap today.

The self-secure plans are reportedly likely to be submitted by the union and DSME’s management to its creditors on Tuesday.

DSME posted an operating loss of KRW 3tr ($2.7bn) during the first half of 2015, having been hit by increased construction costs from low-priced ships, particularly offshore vessels and drilling rigs. The yard is expected to post losses from its overseas units of up to KRW1trn ($861m) in its third-quarter 2015 results.

Meanwhile, the South Korean National Assembly’s Political Affairs Committee is looking into how DSME managed to hide KRW3trn ($2.6bn) in losses through an alleged accounting fraud.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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