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KDB gives green light for financial aid for Daewoo Shipbuilding

Staff Writer |
The board of directors of the state-run Korea Development Bank (KDB) approved a plan to provide 1.8 trillion won ($1.52 billion) in financial aid to Daewoo Shipbuilding & Marine Engineering.

Last week, the shipbuilder's creditors, led by the KDB, drew up 3.2 trillion won worth of financial support for Daewoo Shipbuilding, one of the country's big three shipyards faced with a protracted industrywide slump and falling new orders.

The KDB will convert its loans totaling 1.8 trillion won into Daewoo Shipbuilding's stocks. The state-run bank has already conducted a debt-for-equity swap worth 400 billion won for the shipbuilder.

Separately, the Export-Import Bank of Korea will buy 1 trillion won worth of perpetual bonds to be sold by Daewoo Shipbuilding, which can be counted as capital.

On Thursday, the shipbuilder's labor union agreed to join the embattled shipyard's restructuring move, including a workforce cut, a key condition for the financial aid package.

The labor union had strongly denounced the proposal but eventually gave in, as the creditors threatened to put the shipyard under receivership, if the union does not accept it.

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