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Multiple financial institutions are planning to provide a refund guarantee of US$5 billion in order to help Daewoo Shipbuilding & Marine Engineering obtain new shipbuilding orders. Financial assistance for the company is estimated to be up to 10 trillion won (US$8.8 billion) in the short term, given that trillions of won are likely to be provided by means of direct financing in accordance with the due diligence results slated to be made available at the end of this month.
Specifically, 30 percent of the refund guarantee is to be borne jointly by the Korea Development Bank, which is the largest shareholder; the Korea Trade Insurance Corporation; and the Export-Import Bank of Korea, which is the main creditor. The rest is shouldered by commercial banks. In this context, the Korean government will hold a meeting on Oct. 22 so as to discuss the resuscitation of the company and financial support.
According to the shipbuilder, the refund guarantee allows it to win contracts worth up to 15 trillion won (US$13.2 billion). As of the end of the third quarter, the company’s losses were estimated to be about four trillion won (US$3.5 billion). The Korea Trade Insurance Corporation changed its stance at the last moment, allowing the financial support for Daewoo to be doubled.
“What matters now is helping the company to get new contracts so that it can stand on its own feet rather than life extension based on some stop-gap measures,” said a government official, adding, “Ultimately, the refund guarantee determined at this time is for a return to normal.”