Korea Development Bank raised share in finance troubled South Korea’s Daewoo Shipbuilding & Marine Engineering (DSME) to 79.04%, according to the ongoing restructuring problem. The leading creditor increased its share by 29.3%, despite that owned shares dropped from 135,986,494 to 51,834,073. The capital and business restructuring of the shipyard is underway, as Korea Development Bank pushed through a debt-to-equity swap in its latest bid to right the books at the yard. Following the new transaction, the shipyard is almost fully-owned by the state bank, which additionally engages the government with its rescue.
Last week, the South Korea’s Finance Minister Yoo Il-ho explained that one of the main targets of the government is to rescue the troubled shipbuilding industry. He answered the criticism about the inconsistent actions by striving to save Daewoo Shipbuilding & Marine Engineering while letting Hanjin Shipping to collapse.
“DSME had the state-owned Korea Development Bank as its major shareholder, while Hanjin Shipping is largely a private enterprise”, said Finance Minister Yoo Il-ho. “It was thus difficult to apply management normalisation and financial support equally. While DSME still has world-class cost competitiveness, Hanjin Shipping was in a state of low-cost competitiveness. It’s difficult to compare Hanjin Shipping with DSME”, added he.
Daewoo Shipbuilding & Marine Engineering is the fourth largest shipbuilder in the world and one of the “Big Three” shipbuilders of South Korea (including Hyundai and Samsung). The shipyard suffered from declining ship orders during the recent years, but was also accused for 1.5 trillion won (approximately US$1.27 billion) of accounting fraud by South Korean Board of Audit and Inspection. This additionally worsen the situation with the shipyard and put it close to bankruptcy.