Daewoo Shipbuilding set to sell 500 bln won new stocks

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Shareholders of Daewoo Shipbuilding & Marine Engineering Co., a financially troubled shipbuilder, approved a proposal on Tuesday to increase the ceiling of new stock issuance, the latest in a series of steps to improve its shaky financial status.

The shipbuilder plans to sell 414 billion won ($353 million) worth of new stocks, and may increase the figure to 1 trillion won depending on market conditions, it said.

The new shares will be sold for 5,050 won each. Shares of Daewoo Shipbuilding closed at 5,110 won on the Seoul bourse, down 1.73 percent from Monday’s close.

Daewoo Shipbuilding logged operating losses of 4.5 trillion won in the first three quarters due to a delay in the construction of offshore facilities and order cancellations, raising concerns that it may face a liquidity shortage.

Last month, its creditors, led by state-run Korea Development Bank, pledged to provide 4.2 trillion won worth of financial aid to the shipbuilder.

In return, Daewoo Shipbuilding is seeking to cut costs and sell some affiliates and its headquarters office building in Seoul, saving 1.85 trillion won in cash.

The capital increase will be funded by its main creditor, KDB, and employees, according to the shipbuilder. KDB will chip in 383 billion won to buy the new stocks, with employees to fund another 31.5 billion won.

Other local rivals, such as Hyundai Heavy Industries Co., have reported massive losses so far this year due to a sharp fall in new orders and increased costs stemming from a protracted procedure in building offshore facilities.

Source: Yonhap

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