Ailing Doosan Heavy Wins Gov't Bailout
29 March, 2020
Doosan Heavy Industries and Construction, which is suffering from an acute cash shortage, will be thrown a lifeline with W1 trillion in emergency funding from state-run Korea Development Bank and the Export-Import Bank of Korea (US1$=W1,229).
Doosan Heavy said Thursday that both public lenders decided to extend the emergency funding. The amount of money will be offered in the type of W1 trillion soft loan to Doosan Heavy. Doosan Corporation, the parent company of Doosan Heavy, will offer you stocks and real estate as collateral.
That allows Doosan Heavy to avert a default on its debt.
A senior industry source said, "That is a farce where in fact the government destroyed a healthy company and uses public funds to put it on life support."
Even until 2016, Doosan Heavy produced sales of W4.7 trillion and an operating profit of W280 billion. But following its bread-and-butter nuclear power plant business was sucker-punched by the Moon Jae-in administration's nuclear phaseout, it suffered a net loss of W495.2 billion this past year.
Deteriorating earnings at affiliate Doosan Engineering and Construction, which received W1.7 trillion in the help of Doosan Heavy in the last decade, compounded financial woes.
Doosan Heavy attempted to rescue itself by downsizing, rotational leave of staff and voluntary retirement of staff over 45, but that had not been enough to redeem maturing debt.
As of the end of 2019, Doosan Heavy owed W4.9 trillion, rising to W5.9 trillion if money borrowed by affiliates is counted. Doosan needs to repay W1.2 trillion this season, redeem W600 billion in corporate bonds the following month and handle another W500 billion in bonds with warrants in-may.
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