South Korean shipbuilding giant Daewoo Shipbuilding & Marine Engineering (DSME) is moving forward with recently considered plans to sell its non-core assets and terminate non-essential departments as part of restructuring process following dismal financial results for the quarter ended June 30, 2015.
Daewoo Shipbuilding had an operating loss of KRW 2.39 trillion (USD 2.1 billion) in the second quarter of 2015, confirming media predictions that saw the shipbuilder’s shares plunge by 30 % i n July.
The shipbuilder’s losses stem from a dip in prices of ships and offshore facilities, along with low oil prices that have negatively affected the number of orders for drillships and offshore facilities, as international oil majors are shying away from new orders and cutting their capital expenditures.
DSME intends to sell its headquarters in Seoul, and terminate or sell units that are not related to construction of merchant vessels, specialized vessels, and offshore vessels and facilities. DSME’s wind power arm DeWind Co is one of the units listed for sale. Non-core units brought 10% of revenue to DSME in 2014.
The company has not announced any plans to cut staff yet.
The shipbuilder’s largest creditors, led by state-run Korea Development Bank, have started reviewing massive restructuring moves for the shipbuilder, including asset sales, back in July.
Other creditors include Hana Bank and Korea Exchange Bank which have extended a combined KRW 1.01 trillion worth of loans, followed by Kookmin Bank with KRW 897 billion, Woori Bank and Shinhan Bank with KRW 547 billion and 409 billion each, totaling in KRW 21.7 trillion.
World Maritime News Staff