Seoul presses Daewoo Shipbuilding creditors to back bailout
Otherwise, a bankruptcy could deal a $51bn-plus blow to the economy
KENICHI YAMADA, Nikkei staff writer
SEOUL -- The state-run Korea Development Bank on Monday urged creditors of Daewoo Shipbuilding & Marine Engineering to agree to a government-led capital injection and debt-rescheduling program for the ailing company.
Creditors will vote on the plan early next week. If they reject the bailout, the shipbuilder could be forced into bankruptcy.
The KDB, one of Daewoo Shipbuilding's largest shareholders, explained at a news conference that the government plan would be in creditors' best interests. They would be able to recover 50% of bonds and commercial paper with the bailout, compared with less than 7% if Daewoo Shipbuilding filed for bankruptcy, the bank said.
But the National Pension Service, a key creditor, worries that the government aid would lead to greater losses. The KDB said that the public pension fund had asked the bank to further reduce Daewoo Shipbuilding's capital and revise the ratio on debt-for-equity swaps, but that it could not meet these requests.
The South Korean economy will take up to a 59 trillion won ($51.6 billion) hit if Daewoo Shipbuilding goes bankrupt, the government estimates.