Cash-strapped Daewoo Shipbuilding & Marine Engineering Co., a major shipyard here, said Wednesday that it has received a “qualified opinion” from its external auditor on its 2016 financial statement, heralding the publicly traded firm to be classified as a supervised stock on the local stock market.

In a regulatory filing by the shipyard, Daewoo Shipbuilding said its external auditor, Samil PricewaterhouseCoopers, gave the result of the audit review of its financial statement.

The qualified opinion is usually expressed when an external auditor is not able to obtain sufficient and appropriate audit evidence to provide a basis for its audit opinion.

Daewoo Shipbuilding was also given the same audit opinion from the auditor for its third-quarter financial statement.

“Given (Daewoo Shipbuilding’s) financial status and unusual environment, its creditors’ bailout plan and the loss-sharing among interested parties affect its going concern’s value, and we could not review the company sufficiently with concrete information,” the accounting firm said.

Daewoo Shipbuilding, set to hold a general shareholders meeting on Thursday, should have submitted its audit result a week earlier, but failed to do so.

With the qualified audit opinion, Daewoo Shipbuilding will be designated as a company under administrative supervision on the local bourse.

Trading of Daewoo Shipbuilding has been suspended since July last year due to its eroded capital base. The government is seeking to resume the company’s stock transactions during the second half of the year after improving its financial status through a massive debt-for-equity swap and debt write-offs.

Meanwhile, Daewoo Shipbuilding said it suffered a net loss of 2.79 trillion won (US$2.5 billion) last year and an operating loss of 1.53 trillion won. For 2016, its sales reached 12.82 trillion won.

Last week, the creditors of Daewoo Shipbuilding, led by the state-run Korea Development Bank, announced a fresh rescue package worth 6.7 trillion won for the ailing shipbuilder, but only if all stakeholders agree to a 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.

Bondholders are also required to give a three-year grace period to the repayment of the remaining debt.

Daewoo Shipbuilding is required to cut 25 percent of its personnel costs and slash its workforce by 1,000.

Source: Yonhap