AsiaShipyards

DSME will make more cuts as order slump worse than anticipated

Admitting it will fall well short of its annual sales target, under pressure Korean yard Daewoo Shipbuilding & Marine Engineering (DSME) has announced further asset sales in the coming seven weeks worth a total of KRW700bn ($609m) taking its total asset sales to more than $5bn.

DSME ceo Jung Sung-leep said yesterday he expects the yard to notch up orders this year worth no more than $2.5bn, far less than the originally forecast $10bn. He hinted at cutting back offshore related construction next year.

“If next year’s new orders fall short of $5 or $6 billion, we may face difficulty in repaying maturing debt, but we are working on a variety of measures to avoid such a scenario,” Jung said.

DSME’s creditors, led by the state-run Korea Development Bank, will soon announce a debt-for-equity swap and other measures, worth KRW3trn.

DSME finds itself in its current financial predicament not just because of a slump in orders. The yard has been hit by a massive accounting scandal which has wiped billions of dollars from its books. In the ongoing investigation into the fraud a Deloitte Anjin executive was detained Wednesday on charges of deliberately ignoring the scandal.

The Seoul Central District Court issued an arrest warrant for the executive surnamed Bae, the first employee of the accounting firm to be arrested with regard to the DSME scandal.

Investors have already filed a lawsuit against the accounting firm.

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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