April 26, 2024

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[THE INVESTOR] The National Pension Service backed a debt restructuring plan for bondholders of ailing Daewoo Shipbuilding & Marine Engineering hours before critical meetings on April 17, giving a boost to hopes for its revival.

“We concluded that accepting the plan will be in better for our interests,” the state-run pension fund said in a brief statement. 

The NPS holds 390 billion won (US$342 million) of DSME corporate bonds, accounting for the largest at almost 30 percent of the total of 1.35 trillion won. It also owns 45.5 percent of 200 billion won commercial papers that mature on April 20.

Following NPS’ lead, the second largest bondholder Korea Post with 180 billion won, said it has also accepted the proposed plan. As of 10 a.m., other key institutional investors such as National Credit Union Federation of Korea, National Federation of Fisheries Cooperatives and KB Asset Management also gave the green light to the rescue plan.

Five crucial meetings with debtors are scheduled to be held on April 17-18 at the DSME headquarters.

If anyone opposes the proposal, the troubled shipbuilder will immediately be put under a prepackaged plan, a combination of a debt workout and court protection, according to the Financial Supervisory Service.

The first meeting of bondholders, whose debt of close to 80 percent of the total amount will mature by end-July, have approved the plan, according to DSME.

As per the rescue plan suggested by the main creditors -- KDB and Export-Import Bank of Korea -- bondholders are required to swap up to 50 percent of their debt to equity with a three-year grace period for unsecured loans. In return, KDB and KEXIM will inject fresh liquidity of 2.9 trillion won.

By Park Ga-young (gypark@heraldcorp.com)