Self-rescue Plans Approved
Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. have won tentative approval from their main creditors to go ahead with their self-restructuring schemes worth over 5 trillion won (US$4.19 billion) in total.
When there is no problem with due diligence conducted by accounting firms in the future, their self-rescue plans will be confirmed. As the nation’s top three shipbuilders are planning to carry out a restructuring in earnest, large shipbuilders should come up with measures to save 10 trillion won (US$8.39 billion) within two to three years, including the self- restructuring plan of Daewoo Shipbuilding & Marine Engineering Co. (DSME).
According to financial industry sources on June 1, Hyundai Heavy obtained tentative approval from its main creditor, KEB Hana Bank, for a 3.5 trillion won (US$2.94 billion) self-rescue plan the day before. The Korea Development Bank (KDB), main creditor of Samsung Heavy, also said that it has confirmed the self-rescue plan of Samsung Heavy and selected an accounting firm which will carry out an actual inspection on the same day. Samsung Heavy’s self-made plan is worth 1.5 trillion to 2 trillion won (US$1.26 to 1.68 billion), which is slightly increased from the initial proposal.
With this, Hyundai Heavy and Samsung Heavy, two of the nation's big three shipyards, are undergoing restructuring in earnest. DSME, which has the weakest financial structure out of three, is still struggling to map out the self-rehabilitation plan but it will confirm the plan by the middle of June, based on the results of a so-called stress test conducted by the accounting firm.
Hyundai Heavy, which confirmed the self-rescue plan for the first time, has decided to raise funds of 3.5 trillion won (US$2.94 billion) by 2017. The plan doesn’t include an initial public offering of Hyundai Oilbank. Most measures in the plan were discussed earlier but the company has decided to carry out the plan a year in advance to secure liquidity quickly.
Under the approved measure of Samsung Heavy, it will sell off some of the assets such as the Geoje Samsung Hotel in Geoje Island and security holdings, and cut its labor force. Accordingly, the company will proceed with an actual inspection by an accounting firm. The plan doesn’t include Samsung Group’s support measures.