SHI: Self-rescue scheme to be finalized this week

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The state-run Korea Development Bank will finalize a self-rescue plan proposed by Samsung Heavy Industries Co., a major South Korean shipyard, this week, which includes a capital increase and workforce layoffs, industry sources said Tuesday.

According to the sources, the policy lender, the main creditor for the shipbuilder, will decide whether to approve the proposed self-restructuring plan, after reviewing it along with a consulting firm.

Earlier, Samsung Heavy proposed a 1.45 trillion won self-rescue plan, including stock sales and job cuts, as it grappled with falling freight rates amid slackened global demand and tougher competition.

The plan also includes selling non-core assets and suspending part of its production facilities.

Industry watchers predict the company could raise about 1 trillion won by selling new stocks to its affiliates.

Samsung Electronics Co., the group’s flagship, is the largest stakeholder in the shipyard with 17.62 percent, and other affiliates, such as Samsung Life Insurance Co. and Samsung SDI Co., also own stakes.

Meanwhile, workers at Samsung Heavy went on a partial strike last week, demanding the company nix its tough restructuring plan, marking the first time that a troubled South Korean shipbuilder has faced a labor dispute.

Samsung Heavy workers’ partial strike is the first of its kind this year with their counterparts at Hyundai Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. set to take similar collective action.

Samsung Heavy is one of South Korea’s three major shipyards reeling from snowballing losses caused by falling global demand and tougher competition. The Seoul government and creditor banks, including the state-run Korea Development Bank, have called for “bone-crushing” reform efforts, including massive job cuts.

Workers at Daewoo Shipbuilding & Marine Engineering Co. also approved a strike proposal earlier this week, and Hyundai Heavy Industries Co.’s unionized workers are set to vote next week on whether they will go on a strike.

Source: Yonhap

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