[Courtesy of Samsung Heavy Industries]
Samsung Heavy Industries, the world's third-largest shipyard, has been rushed to the emergency center for corporate restructuring, waiting for an injection of cash from creditors to reduce its snowballing debt.
Bank officials said the shipyard's voluntary debt restructuring program has been submitted to its main creditor, Korea Development Bank, following the footsteps of its two domestic rivals -- Hyundai Heavy Industries and Daewoo Shipbuilding and Marine.
With Samsung joining a club of firms to be reborn through creditor-led restructuring, the world's three largest shipyards, all in South Korea, face the forced shutdown of idle drydocks for a certain period that would help the global shipbuilding industry reduce oversupply and a glut after all.
South Korean shipyards have been reeling from a protracted slump in the global shipbuilding industry. Demand has been weak due to low oil prices while competition with Chinese rivals has intensified. Oil companies have reduced spending while rig owners have canceled orders or asked for delayed ship delivery.
Shipbuilding has been selected by South Korean government officials and creditors as an ailing industry requiring swift and intensive restructuring to stop their woes from hurting Asia's fourth-largest economy.
Samsung Heavy has struggled to cut its debt under pressure from creditors to roll out a self-restructuring plan that would include job cuts and the sale of real estate, equity holdings and other non-core assets.
Last week Samsung Heavy secured a cash reserve of 37.3 billion won ($32 million) through the sale of its stake in Doosan Engine. Some 1,000 Samsung Heavy workers quit last year through voluntary retirement, but creditors want more before providing fresh bailout loans.
Samsung Heavy posted a record loss of 1.5 trillion won last year. With no fresh orders, the company's crisis has worsened this year with its first-quarter operating profit tumbling 77 percent on-year to 6.1 billion won.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
