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Daewoo Shipbuilding to Issue New Shares Worth $353 Mln

Daewoo Shipbuilding to Issue New Shares Worth $353 Mln
Daewoo Shipbuilding & Marine Engineering Co Ltd said on Tuesday it will issue new shares worth 414 billion won ($353.1 million) to improve its financial position.

The nation’s second-largest shipbuilder said on Dec. 22 that it has decided at the board meeting to sell 414 billion won (US$353.54 million) worth of new stocks under the third-party allocation of new shares method as part of an effort to improve its financial structure. At an extraordinary shareholders meeting held in the morning before the decision was made by a board of directors, a proposal to increase the ceiling of new stock issuance from the previous 400 million shares to 800 million shares was approved.

To raise more capital, the company will issue 82 million new shares at 5,050 won per share. The expected issue price of new stocks was set after applying a 3 percent discount rate to the weighted arithmetic average of the stock prices from Dec. 16 to 18, which is the estimation period.
Under the third-party allocation of new shares method, 75.8 million shares will be purchased by the company’s major shareholder, Korea Development Bank (KDB), for 382.5 billion won (US$326.64 million), and 6.2 million shares will be bought by the employee stock ownership association for 31.5 billion won (US$26.9 million). The deadline for the payment of new shares is Dec. 23 and the effective date of new shares is the next day, Dec. 24. This paid-in capital increase is meaningful in that the company’s major shareholder, KDB, and the company’s employees joined hands to improve its financial status.

On Oct. 29, KDB pledged to provide 4.2 trillion won worth of financial aid to the shipbuilder in phases, including a paid-in capital increase and debt-equity swap.
With the support from its major shareholder, employees of DSME decided to voluntarily take a part in capital raising as part of sharing the burden to stabilize the business early. About 82.4 percent, or 10,273 employees, will participate in the capital increase.

Each individual will purchase new shares worth 150 percent of the standard wage from incentives settled at the wage negotiations this year. Also, a considerable number of the employees will raise more cash, along with the purchase.

A total of 10,273 DSME employees, equivalent to 82.4 percent of all those working for the company, are said to be taking part in the capital increase on their own volition. “Most of our executive and staff members said they were willing to share the pain of their company with the creditor providing the large-scale backup,” an official at the DSME explained, adding, “They are likely to chip in at least 150 percent of their standard wage determined at this year’s wage negotiations.”
The DSME is planning to return to normal business as early as possible by means of not only a capital increase but also the disposal and liquidation of non-core assets and subsidiaries.

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