Doosan Heavy gets loan to pay dollar bond

Home > Business > Industry

print dictionary print

Doosan Heavy gets loan to pay dollar bond

The Export-Import Bank of Korea (Eximbank) approved Doosan Heavy Industries & Construction’s request to convert a foreign currency bond worth $500 million due April 27 into a loan.

The deal will help cash-strapped Doosan Heavy Industries avoid a liquidity crisis for the present.

The state-run bank announced Tuesday that it decided to provide a 586.8 billion won ($476.6 million) loan to Doosan Heavy Industries to pay back the foreign currency bond. The loan is for one year.

Eximbank said Doosan Heavy Industries already made arrangements with six financial institutions to pay bondholders in won instead of dollars. Eximbank decided on the 586.8 billion won loan based on an exchange rate of 1,170 won per dollar.

“This decision does not ensure additional support for Doosan Heavy Industries & Construction,” Eximbank said in a statement. “The deal fits the policy intention of providing financial support for companies impacted by the Covid-19 crisis.”

Eximbank has already poured a lot of money into saving the cash-strapped power plant builder.

Operating profit for Doosan Heavy Industries has steadily dwindled, most recently reaching 87.7 billion won in 2019 from a record-high 477.4 billion won in 2012. The company has reported net losses every year since 2014, with the exception of a 15.8 billion won net profit in 2017.

Late last month, Eximbank and the state-run Korea Development Bank decided to extend a 1 trillion won loan for Doosan Heavy Industries. Under the agreement, Doosan Corporation’s shares of some affiliates and real estate assets were put up as collateral.

Even though the worst is avoided for now, Doosan Heavy Industries still has a heavy debt load and risks a liquidity crisis as the company’s main business areas suffer.

The company’s main thermal and nuclear power plant businesses, which accounted for around 85 percent of sales last year, have taken a hit for years due to the global trend of shifting to renewable energy sources and the Moon Jae-in administration’s nuclear phase-out policies.

The company has to pay back more than 4.2 trillion won by the end of this year in maturing corporate bonds and loans.

To appeal for more support from creditors, Doosan Heavy and its 32.3 percent owner Doosan Corporation, the holding company of Doosan Group, recently submitted a turnaround plan, which many expect to contain the selling off of a number of affiliates and assets.

Doosan Heavy Industries has also offered retirement packages to some employees.

Many are expecting Doosan Group to sell its 65.5 percent stake in Doosan Fuel Cell and 50.84 percent stake in Doosan Solus.

Creditors have also pressed Doosan Heavy Industries to spin off profit-making affiliates. One idea that has been widely reported is spinning off Doosan Heavy Industries’ stake in Doosan Infracore, which partly owns Doosan Bobcat, and letting Doosan Corporation acquire the stake.

Eximbank said it is in the process of reviewing the turnaround plan and will make a final decision in a few weeks.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]

More in Industry

SK Telcom merges two security services subsidiaries

KDB requests sit-down with Asiana unions about takeover

Are you Taycan to me?

Facebook hit with $6 million penalty for customer data leak

Spinoff to give LG chairman's uncle his own conglomerate

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now