DSME sheds real estate as part of turnaround

Daewoo Shipbuilding & Marine Engineering (DSME) put several pieces of real estate in South Gyeongsang up for sale on Wednesday as part of its restructuring measures.

DSME, one of the nation’s largest shipbuilders and currently swimming in debt, said it decided to sell eight properties in Geoje, South Gyeongsang, including industrial and apartment complexes built for employees, who now have to relocate, in order to secure liquidity. These properties were “not originally included in the restructuring plan submitted to creditors in June,” the company said in a statement, “but as the global shipbuilding industry shows no sign of recovery, we came up with an additional slimming plan to survive.”

In the company’s last turnaround plan submitted to creditors, DSME promised to come up with 5.3 trillion won ($4.6 billion) to secure liquidity for the company. But market conditions failed to improve, and the company was roundly criticized by the public for its insufficient restructuring efforts. As a result, the company announced an even tighter plan last week, increasing the number to 6 trillion won.

At the time of the announcement, the company had already secured 1.5 trillion won. The latest real estate sale is expected to raise another 530 billion won, DSME said. “We will sell everything other than assets crucial for survival to secure liquidity and stabilize the company’s financial structure.”

Last month, DSME sold its headquarters in Jung District, central Seoul, for 170 billion won, though the company still works in the building.

CEO Jung Sung-leep last week proposed cutting 36 percent of the company’s remaining workforce, or 4,600 workers, by 2018. The cost-saving measure enraged labor union members, which could put a dent in the company’s restructuring efforts. DSME’s creditors have required the company to submit documents that confirm the union’s support of all restructuring measures before providing any further cash.

Since the company’s turnaround plan has been revised and the labor union’s leaders have changed, the creditors are seeking approval from the union.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]