In a welcome move which temporarily diverts the financial pain suffered by South Korean shipbuilders, Hyundai Heavy Industries (HHI) and Daewoo Shipbuilding & Marine Engineering Co (DSME) have reached preliminary deals, collectively estimated at $2.4bn with an Iranian shipping company Islamic Republic of Iran Shipping Lines (IRISL) and an Iranian petroleum company Iranian Offshore Oil Co. (IOOC) to build ships, tankers and offshore equipment.
However, the efforts have fallen short of reaching official contracts as the companies have just signed memorandum of understandings (MOUs).
Hyundai Mipo Dockyard, a subsidiary of HHI, signed a MOU with IRISL for orders of 10 tankers and at least six handy-size bulk carriers.
Hyundai Heavy was also in talks with IRISL for building around six container carriers with a 14,500 TEU capacity. In this deal, however, HHI was known to be competing with China’s Dalian Shipbuilding Industry Co.
IRISL, which operates about 115 oceangoing vessels, with a total of capacity of 3.3m tons, has an aging fleet which requires urgent replacement. While IRISL was modernizing its vessels, the company was chartering ships from foreign shipping companies including Greek carriers.
DSME was in negotiations with IOOC to seal orders of at least five jack-up rigs. But the deal also reached just signing a MOU.
Separately, Daewoo’s creditors have urged the shipbuilder’s workers to refrain from going on a strike as the restructuring plan outlined by the company had proposed job cuts in order to stay viable, financially.
Source: Business Korea
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
South Korea’s top 3 shipbuilders, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries, have come up with their second stage of restructuring plans to their creditors, worth some $5bn, collectively.
The plans consist of a combination of company restructuring, selling of assets and reduction of wages.
Shipbuilder Daewoo is looking to divest its defense industry unit, which produces military ships and submarines, in order to free up much needed capital.
Daewoo is also said to be looking to offload certain of its properties, including its office building in Seoul, appraised at an estimated value of $150m.
Daewoo, as well as Samsung, are also looking to sell their floating docks.
But sales could be difficult, with the current global ship-building industry in recession and demand low.
Hyundai has seen some 8,000 employees leave the company through regular and voluntary resignations since 2015, but they are encouraging more to opt for early retirement packages in order to make further cuts to the wage bill.
Daewoo and Samsung are also looking to reduce staff by about a thousand each this year.
Source: Hellenic Shipping News