Creditors of a loss-making shipbuilder are set to provide 4.2 trillion won (US$3.63 billion) in financial aid to the financially shaky firm in their latest bid to salvage it, industry sources said Tuesday.
According to the sources, the creditors, led by state-run Korea Development Bank (KDB), and Daewoo Shipbuilding & Marine Engineering Co. signed a memorandum of understanding on Monday to push ahead with large-scale restructuring and financial assistance.
Daewoo Shipbuilding has suffered a more than 4 trillion won loss in the first three quarters, largely due to a delay in the construction of offshore facilities and a series of order cancellations. The creditors will provide a fresh loan of 3.2 trillion won to Daewoo Shipbuilding. KDB also chipped in 1 trillion won to buy newly sold Daewoo Shipbuilding stocks.
With its loss ballooning, the creditors have been working on a rescue plan for the shipbuilder. In return, the shipyardâ€™s labor union agreed not to seek pay hikes or go on strike in return for the massive rescue plan.
Local shipyards are struggling with increased costs stemming from delays in the construction of offshore plants and an industry-wide slump.