South Korea unveils $2.7bn rescue package for DSME

The shipbuilder’s main creditors Korean Development Bank and the Export-Import Bank of Korea said the latest rescue package came less than two years after the KRW4.2trn aid was granted in October 2015.

“Despite self-rescue efforts by the company, reduced orders amid industry-wide recession, weak oil prices and delay in delivery of drillships have resulted in liquidity risks,” Lee Dong-geol, ceo of Korea Development Bank, told the local media.

The struggling DSME is facing a deadline to refinance or pay off KRW400bn on 21 April and additional KRW500bn worth of debts this year and KRW550bn next year.

The financial regulator and main creditor banks said the additional liquidity will be provided only if all stakeholders including private creditors, bondholders, and labor union agree on DSME’s debt restructuring plan.

The rescue package requires creditors to swap debt to equity worth KRW2.9trn and extend bond maturity for up to five years as a precondition for the injection of new funds.

The new aid also calls for the labour union to maintain a no-strike principle and a cut in the workforce by 10% and salary by 20%.

The financial regulator and the main creditors said their latest decision is based on the estimated damage of as much as KRW59trn to the country should DSME go bankrupt.