Daewoo tries to ease cash concerns – report

Daewoo

Daewoo Shipbuilding & Marine Engineering, the world’s largest shipbuilder, is considering measures to bolster its finances as the money-losing company faces about 940 billion won (S$1.2 billion) of bond repayments this year.

“We are doing our best to normalise the company as quickly as we can,” chief executive officer Jung Sung Leep said in an e-mail interview. “It’s difficult for me to go into details right now, but we are considering various measures from all angles.”

Daewoo Shipbuilding is poised for a fourth consecutive annual loss after a plunge in oil prices dented demand for its vessels and offshore projects. The company has pledged a 6 trillion won restructuring plan, which includes cutting 5,500 jobs by next year and reducing output, in exchange for funding from creditors led by state-owned Korea Development Bank.

The company, which posted a record loss in 2015, may report a net loss of 83 billion won for 2016 next month.

As of Sept 30, the company had cash and equivalents of 739 billion won, according to its third-quarter financial report issued last November, of which 329.3 billion won is restricted as collateral for other funding.

Cash available is not enough to repay bonds maturing this year. Based on its financial report, 440 billion won of debt is due on April 21, 300 billion won on July 23 and 200 billion won on Nov 29. It also has 350 billion won of bonds maturing on March 19 next year.

The yield on the company’s 3.369 per cent local-currency note due April has surged 139 basis points since the start of the year to 13.74 per cent as of Thursday.

Source: Bloomberg

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