South Korea’s financially-troubled Daewoo Shipbuilding & Marine Engineering Co. (DSME) is expected to speed up its restructuring efforts to secure liquidity by cutting 3,000 workforce by the end of next year and selling three of its five docks, its core facility in building vessels.

The company’s such reform efforts would be made earlier than initially planned as 940 billion won ($839.4 million) worth of corporate bonds will mature between April and November next year and it is forecast to need additional 3.3 trillion won worth of funds by 2020 to run the company.

According to multiple sources from the country’s financial authority, creditor group and shipbuilding industry on Tuesday, the government is expected to outline DSME’s restructuring measures by the end of this month when it announces plans to restructure the country’s shipbuilding and shipping industries that have been suffering from liquidity woes amid dwindling demand due to a protracted slump in oil prices and the slowing global economy.

Sources said the DSME’s measures are expected to include a reduction of workforce by 1,000 this year, followed by 2,000 more cut next year with an aim to keep the total number of employees below 10,000. As of end June, 12,699 employees work for DSME. The company is currently receiving applications for this year’s voluntary retirement program.

The company originally planned to reduce workforce by 3,000 gradually by 2020, but it was said to be urged to move up the plan as its liquidity crisis has been deepening with its ship orders drying up and drill ship deliveries being delayed.

DSME also plans to dispose 60 percent of docks that are considered a key facility in the shipbuilding industry. If orders continue to dry up until January next year, it is expected to sell all three floating docks by the end of next year. The company has already sold two floating docks this year following a drop in the volume of shipbuilding orders. Currently, DSME has five docks including three floating and two dry docks.

As of the end of June, the company’s capital stood at 1.37 trillion won while its total shareholders’ equity plunged to minus 1.23 trillion won, completely eroding its capital, according to the company’s balance sheet disclosed in a regulatory filing.

By Park Yong-beom and Chung Seok-woo

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