Hyundai Heavy eyes 300 bln won debt sale this month

SEOUL, April 1 (Yonhap) -- Hyundai Heavy Industries Co., the world's leading shipyard, is planning to sell 300 billion won (US$216 million) worth of debt this month as part of efforts to secure cash amid falling orders, industry sources said Wednesday.

According to the sources, the shipbuilder is expected to announce its detailed
plan on the debt sale next week. The size of the planned sale of three-year debt
is much smaller than the estimated 1 trillion won expected by the market.
"Hyundai Heavy's planned debt sale means that the shipbuilder is not facing
difficulty in its cash flows," said Lee Sang-hwa, an analyst at Hyundai
Securities. "But if the company fails to win orders in the second half, it could
tap the debt market again," he added.
Hyundai Heavy's cash and cash equivalent holdings are estimated to have dropped
to 1.5 trillion won at the end of March from 2.34 trillion won at the end of last
year.
South Korean shipyards are rushing to sell debt as a deeper-than-expected
economic slump dries up their cash reserves.
Shipyards in South Korea, the world's largest shipbuilding nation, received
record orders in recent years on rising shipbuilding demand.
But those orders have all but vanished since September as declining global trade
slashed cargo rates and demand for new vessels.
Only Samsung Heavy Industries Co., the world's second-largest shipbuilder,
managed to win a shipbuilding order, valued at $680 million, in the first three
months of the year. Compound their woes, shipping lines worldwide are reportedly
demanding that orders be canceled and delivery of new ships be delayed.
Samsung Heavy is seeking to sell an additional 700 billion won worth of bonds
following the sale of commercial papers worth 700 billion won.
Daewoo Shipbuilding & Marine Engineering Co., the world's third-largest shipyard,
is also considering tapping the local bond market to raise up to 500 billion won.