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.