Troubled DSME is issuing new shares worth 414 billion won

Daewoo Shipbuilding and Marine Engineering (DSME) announced Tuesday that it will raise 414 billion won ($354 million) by issuing new stock as part of an effort to improve its financial structure.

The nation’s second-largest shipbuilder has been under serious strain this year after reporting 4.3 trillion won in losses through the first three quarters mainly due to struggles in the offshore plant business.

The company said the decision was made in a board meeting that decided to issue 82 million new shares for 5,050 won per share. This is a part of a 4.3 trillion won financial support plan that its creditors including Korea Development Bank (KDB) promised in October. DSME said it will likely issue more new stock early next year to raise more capital.

Under the third-party allocation of new shares method, 75.8 million shares will be purchased by the company’s major shareholder, KDB, for 382.5 billion won, and 6.2 million shares will be bought by the employee stock ownership association for 31.5 billion won.

The company said employees of DSME took a part in capital raising to stabilize their employer.

“About 82.4 percent, or 10,273 employees, purchased an average of 3 million won in new shares each,” said a spokesman of DSME. “There were opinions that employees should help the company improve its financial structure since it was also getting big support from creditors.”

The company said it will try to sell properties to raise more cash. The company is trying to sell its headquarters in Da-dong in Jung District, central Seoul. A negotiation with Mirae Asset Global Investments broke down.

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]