On Monday, Korea Development Bank (KDB) announced that plans for a new bailout for troubled Daewoo Shipbuilding and Marine Engineering will move forward despite the objections of one remaining bondholder.
The unidentified retail investor holds about $1.4 million in notes, and it sued last month to block the government's restructuring plan: the latest bailout scheme calls for DSME's creditors to make a $2.6 billion debt for equity swap to match a government assistance package, and the bondholder would like to recoup its full investment instead. The courts have rejected the suit twice, and it is set to go before the nation's top appeals court shortly.
“As the top court is likely to reject the bondholder’s case as did the lower court, the DSME restructuring is set to go forward,” a DSME spokesperson told Korea Times.
If all goes as planned, the yard will receive $450 million in new government-backed loans by the end of this month. The total loan package would be worth up to $2.6 billion, in addition to the $3.8 billion bailout that Korea's government approved in 2015.
KDB, DSME corruption scandal continues
On Friday, ex-KDB chairman Kang Man-soo received a four-year prison term for abuse of power and bribery, among other charges. “Kang abused his power and authority to favor companies run by his acquaintances,” the court found. “He also doesn’t admit his wrongdoings and puts the blame on others despite the seriousness of the crime.”
Kang was convicted of using his position to direct about $6 million in government business to a firm founded by a close associate. The court found him not guilty on charges that he used his power to coerce DSME's CEO to invest in the same company.
Nam Sang-tae, the ex-CEO in question, was arrested last year and charged with bribery in connection with alleged kickbacks paid to Kang's associates. Nam also faces charges that his allegedly corrupt business decisions cost DSME about $25 million in losses.