Another Thread
As Seadrill, a global drilling service provider owned by Norwegian shipping magnate John Fredriksen, said it is on the brink of going under once again, the domestic shipbuilding industry is in an overwrought state. Seadrill gave orders for two drill ships each to Daewoo Shipbuilding and Marine Engineering (DSME) and Samsung Heavy Industries, but it delayed the delivery of them.
DSME has a liquidity crisis as it failed to receive the payment of 1 trillion won (US$886.92 million) from Angolan state oil firm Sonangol due to the delay in delivery. Now, there are concerns that “Sonangol incident” can lead to “Seadrill incident.”
According to foreign media on April 5, Seadrill made an official statement on the 4th (local time) that it agreed to postpone its restructuring plan with creditors for three months. The company said, “The restructuring plan will include “Chapter 11” or debt readjustment.” Chapter 11 is a chapter of Title 11 of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the U.S. It is equivalent to a court receivership in South Korea.
Seadrill has run into dire financial straits as the global drilling market freezes due to persistent low oil prices. The company is negotiating with its creditors over financial structure improvement plans such as the expansion of new capital of US$1 billion (1.13 trillion won) and the extension of borrowings’ maturity periods. It didn’t rule out the possibilities of bankruptcy in the negotiations with its creditors through the Western media.
Seadrill is a major corporate customer which ordered a total of four drill ships to domestic shipbuilders. However, the company currently makes them worry by delaying the delivery. Seadrill notified Samsung Heavy at the end of last month to postpone the delivery of two drill ships which were already completed. This was the second delay after 2015. So, Samsung Heavy couldn’t receive US$730 million (822.7 billion won), 70 percent of the total contracted price. DSME also had trouble receiving 1 trillion won (US$886.92 million) of money on delivery.