South Korea’s state-run Korea Development Bank (KDB) might have to backtrack on earlier statements claiming it would not throw more money towards shipbuilders and shipping lines.
The bank has taken a lot of flak from the general public and opposition politicians for the billions it has shifted to the struggling maritime sector in the past 12 months, forcing it to come out last month and say it was cooling off support for the sector.
Now, however, it might have to give struggling Daewoo Shipbuilding & Marine Engineering (DSME) a capital top up as the yard faces being delisted in Seoul due to its dire financial state.
Under Korea Exchange’s securities listing rule, the exchange can delist any company that reports an impairment of over 50 percent of capital for two consecutive years or whose equity capital is completely eroded with debts that outweighs its assets.
In the first half of 2016, DSME’s total assets were worth KRW15.59trn won while total liabilities amounted to 16.82trn.
Speculation is mounting that KDB will now have to step in before the end of the year to prop up the yard again.
DSME is going through a painful restructuring on the back of the downturn in the offshore markets, limited appetite for any newbuildings and a huge accounting fraud scandal at the yard.