Daewoo Shipbuilding and Marine Engineering (DSME) has decided to manage on an entrustment basis Daehan Shipbuilding (DS) under the on-going workout program (the enterprise recovery program), starting from next July.
According to related industrial players, DSME has reached a latest agreement with the Korea Development Bank (KDB), DS’s main creditor bank, on the plan for DSME to manage DS under entrustment. The entrusted management period will last for three years with DSME’s senior management staffs to be dispatched to DS for normalizing its operation.
DSME will decide to approve the plan in a BOD’s meeting to be held on coming June 21. During the entrusted management period, DSME will look after management innovation, sales and marketing, and others for normalizing DS’s management.
Following the termination of the entrusted management to DSME, market players analyze that DSME will likely acquire DS. KDB is understood to consider giving the first refusal to DSME to acquire DS, same as in the case Hyundai Heavy Industries (HHI) had acquired Hyundai Samho Heavy Industries (Hyundai Samho) formerly called Halla Heavy Industries (HHI) after it had ended its entrusted management of HHI.
DS, which was previously founded by Daejoo Group, is operating one building dock with its yard area of 140,000 square meters (sm) (equivalent to 45,000 pyung) at Haenam, southernmost in Korea. Placed under the recovery work-out program as a result of credit assessment of small- and medium-size shipbuilders made by its creditor banks back in 2009, DS has often been a favorite candidate for M&A by the major Korean shipbuilding players with its advantageous surroundings for ships’ entry, departure and berthing combined with the extra yard area available of 2.08 million sm capable of accommodating the second and the third dock.
As a matter of fact, STX group attempted to take over DS last year, but DS’s creditor banks rejected STX group’s proposal for three year grace on DS’s debts and for a 100% debt-for-equity swap, so the talks broke down.
DSME, whose building docks are fully booked with large scale orders for boxships, drillships, LNG carriers and others, plans to drive new orders for such types to book DS’s idle berths under the entrusted management.
In addition to the above-mentioned orders for high value-added ships, DS is able to build cape bulkers as its mainstay, thus meeting the diversified needs of ship owners.
On the part of DS, the shipbuilder expects to enhance its competitiveness for new orders, conducting ship sales under DSME’s brand during the entrusted management period.
In the meantime, DS, which has already secured an order for two 180K dwt cape bulkers from Hanjin Shipping early this year, is understood to be presently developing designs and driving sales for small sized windmill carriers in the offshore sector and for small-medium sized boxships of 2,500 to 3,800-teu.
Source: Maritime Press