Troubled Daewoo Shipbuilding & Marine Engineering is speeding up its restructuring efforts by moving to sell off its main office building after its creditors offered a massive rescue package to get the ailing company back on track, sources said Wednesday.
The world’s largest shipbuilder by backlogs, which has been hit by huge losses from offshore projects, is expected to name preferred bidders to sell the building in central Seoul worth more than 170 billion won ($150 million), as early as this weekend.
“Two or three preferred bidders will be named by this weekend at the earliest,” a company official said.
According to market watchers, those vying to take over the building include Mirae Asset Global Investments, Kiwoom Asset Management, and Koramco REITs Management and Trust.
It is a part of the shipbuilder’s self-rescue plan having posted a record operating loss of 4.3 trillion won in the first nine months of the year due to delivery delays and order cancellations. It is expected to log a combined loss of 5.3 trillion won this year.
The move comes days after the shipbuilder’s largest shareholder the Korea Development Bank and other creditors decided to funnel 4.2 trillion won in loans and equity into the company to ease a cash shortage.
On Wednesday, the firm said in a regulatory filing that it will accumulate an additional 3.2 trillion won through short-term loans. Experts said the move reflects the creditors’ decision to inject 3.2 trillion won in new loans and increase its capital by 1 trillion won.
Meanwhile, the company’s share price reached a record high in three months on Tuesday after local media reported that Korean conglomerate SK Group is in talks to acquire it. SK and creditors of the shipbuilder denied the rumor in the day.
South Korean shipbuilders including Hyundai Heavy Industries and Samsung Heavy Industries, have suffered increasing losses from offshore oil rigs and production facilities as a plunge in crude oil prices has prompted international oil companies to reduce their capital expenditure.
They bid aggressively for low-margin orders in recent years to fill their order books as the global shipbuilding industry grapples with a supply glut and low freight rates
According to recent industry data, the country’s top three shipbuilders ― Hyundai, Daewoo and Samsung ― are expected to log their worst ever combined operating loss this year ― of over 7 trillion won.
By Park Han-na (hnpark@heraldcorp.com)
