Another state-sponsored bailout is in the making for troubled Daewoo Shipbuilding & Marine Engineering (DSME) amid concerns that the shipbuilder could fail to meet its obligations on bonds maturing as early as April.

Lee Dong-geol, head of state-run Korea Development Bank that is also the largest stakeholder in the shipbuilder as well as its debt, confessed that the bank and state authorities were discussing fresh rescue package for the shipbuilder to help fight its immediate liquidity woes.

The shipbuilder’s bonds worth 940 billion won mature this year, starting with 440 billion won ($384 million) in April.

Lee said the bank would be able to announce a new measure by next month that may include refinancing scheme and new funding in return for stricter restructuring pledge from the shipbuilder. The policy lender is conducting due diligence with experts to figure out how much the shipbuilder needs to avoid falling further into the liquidity crisis. It might need more than 1 trillion won additionally, according to sources.

The government and state lender came under fire for arranging a 4.2 trillion won bailout package in October 2015 in an informal meeting at the presidential office. The shipbuilder faced prosecution probe and trial for accounting fraud of hiding massive losses to draw further funding from the state and private sector.

In the state credit limit arranged in 2015, the shipbuilder has about 700 billion won left and may not be able to meet its debt obligation in April after it uses some of the funds to run shipyards.

“From the mega-scale of orders it could get, we maintain the position to keep DSME afloat rather than letting it go under,” he said. The government also worries waste of colossal state funding that went into the shipbuilder should the company run into trouble.

Shares of DSME closed unchanged at 44,800 won on Thursday amid mixed news. The news of the shipbuilder landing a preliminary prospective deal to build up to seven floating regasfication vessels help to offset investors’ jitters about the shipbuilder’s liquidity woes.

By Chung Seok-woo

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]