[UPDATES] Samsung shipyard chief proposes outsourcing, capital increase

By Park Sae-jin Posted : August 19, 2016, 11:35 Updated : August 19, 2016, 15:22

[Yonhap News Photo]


Samsung Heavy Industries CEO Park Dae-young proposed the outsourcing of shipbuilding to China and Indonesia Friday in an effort to overcome a liquidity crisis as the shipyard's board of directors approved the issuance of new shares which will be listed in November.

The shipbuilding arm of South Korea's largest conglomerate, Samsung Group, has revealed a painful self-rehabilitation package worth 1.4 trillion won (1.26 billion US dollars), along with plans to increase capital by issuing new shares to other group units which hold a combined 24.08 percent stake in Samsung Heavy.

On Friday, the shipyard was allowed to issue some 159 million new shares worth 1.1 trillion won. Given a 20 percent discount, the price was set at 6,920 won per share. Group units will share 80 percent of the new issuance and the rest will go to an employee stockholders association.

The troubled shipyard has been kept afloat with consistent help from other Samsung units, including Samsung Electronics which holds the largest stake of 17.62 percent in the shipyard.  Samsung Electronics vice chairman Jay Y. Lee, the only son of bed-ridden group chief Lee Kun-hee, is not expected to buy new shares.

"I feel a doubt over whether we should build ships only in our shipyard," Park told a shareholders meeting which has been convened to discuss the shipyard's rights offering.

He suggested that Samsung Heavy could farm out orders for the construction of small and mid-sized ships to other shipyards in China, Indonesia and South Korea.

Park urged shareholders to approve his new fund-raising scheme saying the shipyard needs a capital increase now to secure an operational fund in preparation for a prolonged business slump.

A due diligence report by Samjong KPMG showed the shipyard's liquidity shortage would stand at up to 1.6 billion won over the next five years.

Aju News Lim Chang-won = cwlim34@ajunews.com 
 
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