Daewoo Put Under Pressure by Korea EXIM
By Aiswarya Lakshmi
Tuesday, September 29, 2015
South Korea’s second-largest shipbuilder Daewoo Shipbuilding & Marine Engineering Co. (DSME) hit a hurdle in its efforts to get capital injection after the Export-Import Bank of Korea (Korea Exim Bank) delayed necessary funding for its shipbuilding project, reports MKBN.
In June, DSME won a $1.8 billion order from Danish container-shipping giant Maersk Line to build 11 ultra-large container vessels with a capacity of 19,630 TEU.
The Korea Development Bank (KDB) and Korea Exim Bank, two largest creditors of Daewoo Shipbuilding, issued Maersk refund guarantee (RG) for five and six megaships, respectively.
But Korea Exim Bank paid Daewoo Shipbuilding only 60 percent of 900 billion won ($75.3 million), the advance payment from Maersk, saying it would pay the rest installments as early as next March when actual ship building is expected to kick off.
In contrast, the Korea Development Bank immediately paid the shipbuilder the total advance installment it received from the Danish shipping company.
This has resulted in friction between the shipbuilder's two biggest creditors, Korea Development Bank and Korea EXIM. The Danish container carrier Maersk Line informs that it has no part in the dispute.
DSME found itself in trouble after admitting it had kept US$2.5 billion in losses from offshore plant orders off its balance sheet.
Concerns are growing that the shipbuilder may face liquidity crunch because of the delayed liquidity infusion.
Meanwhile, DSME is to lend a total of $114.5mln to SBM Shipyard to extend repayment of its existing shareholder loans. The loan has a 5% interest rate and is equal to around 2.8% of SBM’s equity capital.