South Korea’s Big Three outline restructuring plans

According to sources, South Korea-based Samsung Heavy Industries and Hyundai Heavy Industries received lender approval on their respective restructuring plans.

Apart from headcount reduction, Hyundai Heavy intends to sell real estate, stock, holdings and non-core businesses for balance sheet improvements totaling to $3bn.

Samsung Heavy Industries’ creditor group, led by Korea Development Bank, has provisionally approved a $1.25bn restructuring plan for the firm. SHI’s plan reportedly includes measures similar to HHI’s; although details were not available.

Daewoo Shipbuilding and Marine Engineering, have announced plans to trim wages by 20% and lay off executives. It has announced workforce reductions of 2,300 employees by 2019.

Daewoo also intends to sell its Seoul headquarters building to raise funds.

The “Big Three” reported combined net losses of $4.9bn in 2015, negatively impacted by a marked decline in shipbuilding orders in offshore, bulk and container shipping, and the yards secured only a handful of orders between them in the first months of 2016.

Separately, South Korea’s government is already discussing ways to shore up state-backed creditor banks like KDB and KEXIM in anticipation of the yards’ future needs for large-scale assistance.

Source: The Maritime Executive

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