South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME) has revealed an additional self-restructuring plan amid the falling shipbuilding orders.
The company’s creditors, led by the state-run Korea Development Bank, will now decide on the new self-rescue plan which proposes a further cut in DSME’s workforce and wages, as well as temporary closure of docks, the Korea Herald reports citing industry sources.
The company plans to separate its lucrative defense business, including special vessel, put it in its subsidiary and list it. DSME also denied rumors on the sale of their naval business, however the company said that they are reviewing it.
The company will slash its workforce and wages. It officially planned to cut 3,000 jobs over the next three years but is now considering the additional reduction due to mounting pressure on the high intensity self-restructuring plan from creditors.
DSME has signed a memorandum of understanding to sell its headquarters building in Seoul to Koramco as the preferred bidder at a price of KRW180bn ($151.6m), local reports said.
The sale of the headquarters building is part of the debt-ridden shipbuilder’s self-rescue measures as it attempts to stabilise its severely weakened financial position.
The yard also plans to sell its subsidiary yard in Romania. The overseas assets sales were requested by the shipyard’s major creditor Korea Development Bank.
The country’s top three shipyards suffered a combined operating loss of 8.5 trillion won (US$7.21 billion) last year, due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump. But a huge chunk of the loss, some 5.5 trillion won, came from Daewoo Shipbuilding.
The company managed to turnaround its net profit for the first quarter of 2016 recording KRW 31.4 billion (USD 2.7 million) against a loss of KRW 1.12 trillion in the previous quarter.