Daewoo Shipbuilding & Marine Engineering Co., the world’s largest shipbuilder, won a reprieve from major bondholder National Pension Service and other lenders, helping avert a payment crisis that had threatened to almost shut the company.

The NPS agreed to restructure 1.55 trillion won ($1.4 billion) of bonds issued by the company after the shipbuilder, the Korea Development Bank and Export-Import Bank of Korea took steps to ensure repayment of the debts, the pension service said in a statement April 16. Banks agreed to convert 80 percent of loans to Daewoo into shares and to extend the maturity on the remainder, the Financial Services Commission said separately.

Bondholders including Korea Federation of Small & Medium Business and Korea Post also agreed on Monday’s re-scheduling plan. Two other meetings of bondholders are due to meet tomorrow and they are also likely to approve, analysts said. The reprieve means the vessel maker, unprofitable in each of the past four years, will get more time to make payments on bonds that are due this month.

“The chances of the bond-restructuring plan getting consent in other meetings is very high,” said Park Tae-woo, a credit analyst at Samsung Securities. “Readjusted terms of the restructuring, aimed at ensuring repayment of the debts, have made it more attractive for investors and banks to accept the plan than to turn it down.”

A decision on the financial restructuring of Daewoo was the biggest test for South Korea’s lenders after KDB, the shipbuilder’s majority shareholder, allowed Hanjin Shipping Co. to collapse last year after refusing to support its debt restructuring plan. KDB was in favor of restructuring the loans, saying Daewoo doesn’t have the cash to pay.

Full Content: Bloomberg

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