Hyundai Heavy Industries Co.’s move to secure 1 trillion won (US$892.86 million) of liquidity is part of its self-rescue plans to survive. In addition to Hyundai Heavy, the nation’s big three shipbuilders have implemented up to 90 percent of their self-rescue plans, accelerating restructuring and struggling to survive.
The shipbuilding industry is slowly picking up and the South Korean shipbuilding industry temporarily ranked top of the world in the first half of this year. However, it hasn’t secure enough new orders compared to the level in the boom.
According to industry sources on July 26, the nation’s big three shipbuilders – Hyundai Heavy, Daewoo Shipbuilding and Samsung Heavy – are seeking to sell their subsidiaries in order to carry out a large-scale restructuring and improve the structure.
Hyundai Heavy has implemented nearly 90 percent of its self-rescue plans to generate 3.5 trillion won (US$3.13 billion), showing the highest rate among the three shipbuilders. The company sold its hotel subsidiary Hotel Hyundai, which is not related to the shipbuilding industry. It will also plans to sell more non-core assets in the second half of this year. Hyundai Heavy will withdraw from the financial industry by selling HI Investment & Securities Co.
In addition, the company is about to wind up the sale of its non-core businesses such as construction equipment engine maker Hyundai Cummins, wind power gear box maker Jake in Germany, Taiwanese subsidiary in China and custom power generator designer Hyundai Ideal Electric in the U.S. The sale of its various real estate property and securities are also being completed smoothly.
The situation is very much the same with Daewoo Shipbuilding. Daewoo Shipbuilding plans to sell its subsidiaries at home and abroad by the end of the year. The company is also willing to liquidate its unsold subsidiaries such as U.S. wind turbine maker DeWind acquired in August 2009 and Mangalia Shipyard in Rumania.
However, Daewoo Shipbuilding is now in talks with Damen Shipyard, the largest shipbuilder of the Netherlands, on the sale of Mangalia Shipyard. When the negotiation to sell its 51 stake of the shipyard for 50 billion to 80 billion won (US$44.64 million to 71.43 million) goes well, the sale can be completed by the end of the third quarter. The Rumanian government has the remaining 49 percent stake of Mangalia Shipyard.
In addition to DeWind and Mangalia Shipyard, Daewoo Shipbuilding will sell Samho Heavy Industries, Shinhan Heavy Industries and block plant in China one by one. Recently, the company signed an agreement to sell its subsidiary Daewoo Engineering & Construction Co. for 4.5 billion won (US$4.02 million), accelerating the implementation of its self-rescue plans. Daewoo Shipbuilding has carried out 72.6 percent of its self-rescue plans by achieving 2.07 trillion won (US$1.84 billion) out of the total target of 2.71 trillion won (US$2.42 billion) by the end of this year.
Samsung Heavy is now in talks to sell its buildings including the headquarters in Pangyo, Seongnam, Gyeonggi Province, Samsung Hotel in Geoje, South Gyeongsang Province, and Sancheong Training Institute. The company also announced to come up with its self-rescue plans worth 1.5 trillion won (US$1.34 billion) last year. An official from Samsung Heavy said, “We achieved about 50 percent of our self-rescue plans by the end of June and increased capital of 1.1 trillion won (US$982.14 million) by issuing new stocks in November last year, separately from the 1.5 trillion won (US$1.34 billion) plans.
According to Samsung Heavy's self-rescue plans, the shipyard plans to cut a total of 5,000 jobs by the end of 2018. Last year, 1,500 employees left the company with voluntary retirement. The number of voluntary resignations is expected to be at the same level this year.