Creditors will inject capital of nearly 3 trillion won ($2.6 billion) into Daewoo Shipbuilding and Marine Engineering by this month to rescue the cash-strapped company from delisting risk, industry insiders said Tuesday.
 

Last month, the creditors, including the Korea Development Bank, decided to provide financial aid in the form of a debt-for-equity swap to the company.

On Monday, the embattled shipbuilder’s board decided to sell stocks to the KDB to have its 1.8 trillion won debt swapped with stocks.

The company will approve the sale of a 1 trillion won perpetual bond to the Export-Import Bank of Korea at its regular board meeting on Dec. 23. The perpetual bond will have a maturity of 30 years, with DSME having the rights to extend the maturity. The interest rate is projected to be around 3 percent, sources said.

If the perpetual bond motion is passed later this month, the company will have a total of 2.8 trillion won of capital injection.

As of late last year, the company’s debt ratio stands at 7,000 percent. Its stock trading has also been suspended since June this year.

The capital injection is forecasted to cut the debt ratio to around 900 percent while increasing its equity from minus 1.2 trillion won to plus 1.6 trillion won. Stock trading is also expected to resume in March next year.

Creditors are looking to complete the capital injection by Dec. 29, said industry insiders.

By Lee Hyun-jeong (rene@heraldcorp.com)