The main creditor of Daewoo Shipbuilding & Marine Engineering Co. said Monday it has been preparing for the option of placing the troubled shipbuilder under a sort of court receivership unless all stakeholders agree on a painful debt-for-equity swap plan.

While the preparations have been underway, the state-run Korea Development Bank (KDB) has also been in consultations with private creditor banks of Daewoo Shipbuilding to swap debts into new shares in the shipbuilder or reschedule debts, a KDB official said.

“We are taking a two-track approach,” the KDB official said on the condition of anonymity.

KDB and another state-run creditor, Export-Import Bank of Korea, announced last week a fresh rescue package worth 6.7 trillion won (US$6.02 billion) to the ailing shipbuilder, but only if all stakeholders agree to the debt-for-equity swap plan.

The huge rescue measures represent the second round of bailouts for the shipbuilder that has been suffering severe liquidity problems over heavy losses in its offshore projects.

Under the rescue package, Daewoo Shipbuilding will receive new loans worth 2.9 trillion won, if lenders and bondholders agree to swap 2.9 trillion won of debt for new shares in the shipbuilder.

The rescue package also included a three-to-five year grace period for unsecured loans worth 900 billion won.

Unless they agree on the debt-for-equity swap plan, Daewoo Shipbuilding will be placed under a new corporate rehabilitation program, which is a combination of debt workout and court receivership, the creditors said.

KDB and the private creditor banks of Daewoo Shipbuilding were holding a meeting on Monday to discuss about how to reschedule the debts of the shipbuilder.

Still, analysts warned that it will be a tough road ahead before Daewoo Shipbuilding receives fresh funds.

Daewoo Shipbuilding plans to hold a meeting for its bondholders on April 17-18, but getting an agreement from them for the debt-for-equity swap may not be easy.

Source: Yonhap