Dae sun Shipbuilding, the first mid-sized shipbuilder in Busan, South Korea, which is facing a crisis, has begun to resolve its debt problems and will start a full-scale normalization of its business with its creditors, including dispatching its management team.
According to South Korea’s shipbuilding industry on the 22nd, due to rapid increases in raw material prices and continuing labor costs and a shortage of skilled workers and other factors, South Korea’s medium-sized shipbuilding enterprises are facing management difficulties.
Although the shipbuilding industry is in a period of vigorous development, but South Korea’s medium-sized shipbuilding enterprises are incapable of finding a way out of the predicament. Also, the deterioration of internal and external conditions, such as the consolidation of Japan’s shipbuilding industry, has exacerbated the plight of Korea’s small and medium-sized shipbuilders.
On October 12 of this year, Dae sun Shipbuilding applied to the Export-Import Bank of South Korea for a walkout (business improvement operation). This is a measure to extend the deadline and provide financial assistance to companies experiencing a temporary liquidity crisis.
The company has signed two 14,000-ton multi-purpose vessels and two car ferries with Alkahera Company, an Egyptian shipowner, according to incomplete statistics. four vessels worth about US$250 million, which means that Dae sun Shipbuilding has realized about 70% of this year’s order target for one time. two multi-purpose vessels are expected to be delivered in February and April 2025.
However, Dae sun Shipbuilding still had problems with ship delivery delays due to rising raw material prices and welding workers, which in turn led to a cash flow crisis at the company.
Now, Dae sun Shipbuilding’s creditors, led by the Korea Export-Import Bank (KEXIM) and the Korea Development Bank (KDB), have formally announced a pre-emptive reorganization of Daehwang Shipbuilding.
Dae sun Shipbuilding has announced that it will begin full-scale business normalization activities on November 23 to normalize the management of its main creditor bank, KEXIM, such as dispatching a management team that was jointly formed under a creditor agreement. Dae sun Shipbuilding will carry out restructuring work after signing a financial structure improvement agreement with the KEXIM. Specifically, the agreement will raise KRW170 billion (approx. RMB935 million) continuously through a new form of loan.
In the future, Daesun Shipbuilding plans to sell the Yeongdo Shipyard to repay loans, consolidate and relocate multiple sites, and develop multifaceted business innovations, such as new approaches to the new shipbuilding business and strengthened cooperation with other mid-sized shipbuilding shipbuilders. The company will open up a new future for Dae sun Shipbuilding, one of the leading mid-sized shipbuilders in the Busan area, through close consultation and cooperation with its creditors.