South Korean Banks Give DSME $2.4 Billion in Aid

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By Reuters 2016-11-10 21:12:17

Struggling Daewoo Shipbuilding & Marine Engineering will receive an injection of 2.8 trillion won ($2.4 billion) from two state-run creditor banks to save it from being delisted, one of the lenders said.

Hit by a steep drop in ship orders caused by slowing global trade and lower oil prices, the world's largest shipyard by orders saw its debt exceed assets at the end of June - which under exchange rules would require it to be delisted.

Daewoo's main creditor, Korea Development Bank (KDB), said in a statement it will cancel about 60 million of its Daewoo shares, and reduce the remaining stake by a ratio of ten shares to one to cut the ship builder's debt-to-asset ratio.

It will then inject 1.8 trillion won ($1.6 billion) in Daewoo in a debt-for-equity swap.

The Export-Import Bank of Korea will buy 1 trillion won in Daewoo-issued perpetual bonds to shore up Daewoo's finances, KDB added.

The move had been flagged by KDB last week. Daewoo also said last week that it is slashing its 2018 revenue forecast to about half of current levels as it gets rid of unprofitable businesses.