State-run Korea Development Bank (KDB) on Wednesday gave a go-ahead to Samsung Heavy Industries Co.’s self-rescue plan that includes sale of its non-core assets and stocks along with cut in workforce aimed to raise and save cost by a total of 1.5 trillion won ($1.3 billion).
Samsung Heavy Industries became the second of the three shipbuilding majors after Hyundai Heavy Industries to receive creditors’ endorsement for self-restructuring actions in return for debt relief. The endorsement suggests the government and creditors are opting to give the industry another chance to save themselves instead of carrying out industry-wide restructuring.
The state bank previously indicated that it wanted to see more input from the parent Samsung Group and its large shareholders like Samsung Electronics to improve the shipbuilder’s liquidity woes before approving a self-rescue plan, but decided to allow the process to kick off “to help the company’s prospects of winning new orders.”
Under the plan, the Geoje-based shipyard will sell its Pangyo R&D Center and Samsung Hotel Geoje, as well as its stockholdings to raise about 1.5 trillion won.
On May 17, Samsung Heavy Industries submitted KDB its plan aimed largely at divesting its physical and financial assets in return of a 2.9 trillion won debt rollover. The initial draft had been denied.
But industry sources believe the restructuring outline is a makeshift to buy time, and that more rigorous action may be required if slow business continues.
By Chung Seok-woo
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