A line has been drawn in the sand for one of the world’s top shipyards. The new boss of the state-run Korea Development Bank (KDB) has told Daewoo Shipbuilding & Marine Engineering (DSME) it should expect no additional funding this year. Creditors, including KDB, agreed to pump KRW4.2trn ($3.42bn) into the yard last November as it faced severe financial difficulties, stemming from mistimed offshore deals and accounting irregularities. DSME is still waiting on around 50% of this sum to arrive.
KDB chairman Lee Dong-geol, at his first press conference yesterday, said DSME should focus more on LNG carriers and defence contracts rather than tricky offshore deals.
“DSME is considered to be highly competitive in the LNG carrier and defence industries,” Lee said. “I would advise the shipbuilder to reduce its reliance on offshore plants and expand the defense business, which is why I believe it is possible to normalise the shipbuilder and make it a successful case of restructuring.”
DSME is selling non-core assets and has let go of 1,000 staff at its main yard in Geoje. Romania’s largest shipyard, DSME Mangalia, is part of this planned firesale.
Lee also commented on the plight of endangered local shipping line, Hyundai Merchant Marine (HMM). Lee said HMM needs to carry out urgent debt restructuring. HMM is in discussions with other owners at present to try and cut charter fees it owes. Lee said HMM’s stakeholders need to make a bold decision about voluntary debt adjustment.