Daewoo Shipbuilding & Marine Engineering (DSME) discontinued the sell-off of its Special Ship Business (defense industry) Division, which had been gone ahead with as one of its management normalization projects, because of no economic benefit from the sell-off.
DSME said it decided not to pursue the separation of the Special Ship Business Division through an August 25 announcement concerning a media report in May of last year, which said that it would sell off the defense business division separately.
According to the company's explanation, DSME has reviewed the sell-off of Special Ship Business Division in terms of legal and regulatory requirements and liquidity improvement effects, but came to a conclusion that a possibility of satisfying legal licensing requirements is slim and operation efficiency will be small after separation.
In particular, the proposal by DSME was reportedly judged "not feasible" owing to insufficient facilities during a preliminary review process by the Ministry of Trade, Industry and Energy. The judgment came from the viewpoint that a large-scale investment is needed in order to meet the licensing requirement but raising fund for the additional investment does not match the goal of securing liquidity intended by the separation of the Special Ship Business Division.
In the first place, DSME was planning to secure liquidity of approximately 300 billion won (US$270 million) through the spin-off of its Special Ship Business Division. Therefore, there is concern among some people that the discontinuance of the sell-off process may cause some problems in the implementation of DSME’s self-rescue plan.
However, "Since we are pushing forward with the sale of local assets and real estate including a dormitory for employees in the Geoje area amounting to about 700 billion won (US$630 million) not in the existing self-rescue plan, there is no problem in the implementation of the whole self-rescue plan," said an official of DSME
DSME has paid off 2.34 trillion won or US$2.1 billion (83%) of the 2.77 trillion won (US$2.4 billion) debts which the company aims to pay off by the end of this year. DSME’s total debts are about 5.9 trillion won (US$5.3 billion).