S. Korea poised to restructure ailing shipbuilders

SEOUL, Nov. 18 (Yonhap) -- The South Korean government and local banks are set to restructure nonviable shipbuilders in a bid to prevent possible collapses from weighing on the real economy, officials said Tuesday.

The government and the banking industry are considering allowing shipbuilders to
apply for a liquidity supply program similar to that being offered to builders,
through which they would get financial support with strings attached.
"It would be desirable for shipbuilders to receive liquidity in a similar manner
to construction firms," a government official said.
South Korea, home to seven of the world's top 10 shipyards, had secured record
orders in recent years because of strong demand for crude carriers and offshore
exploration equipment amid high oil prices. But the slumping economy and a sharp
decline in new orders, along with foreign exchange losses are eroding into local
shipbuilders' profitability with some smaller shipyards facing a severe liquidity
squeeze.
The possible restructuring in the shipbuilding industry follows moves by the
government to weed out nonviable builders and savings banks.
Local banks plan to advise builders suffering from a temporary cash shortage
among the country's 100 builders to join a liquidity support program. If the
construction firm agrees to receive the liquidity and attendant conditions, its
creditor bank will roll over debt by one year.
The process is also intended to kick out nonviable firms to prevent their
possible failure from severely hurting the real economy and the banking sector.
sooyeon@yna.co.kr
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