SUNGDONG Shipbuilding Announces Application for Court Takeover
On March 22nd, the heavily indebted Korean medium-sized ship company SUNGDONG Shipbuilding announced that it had applied for a court to take over. SUNGDONG Shipbuilding said that the company has applied for a court-led reorganization procedure.
SUNGDONG Shipbuilding’s largest shareholder Korea Export-Import Bank announced on March 8 that the creditors decided to terminate the SUNGDONG shipbuilding debt repayment plan led by the creditors. Currently, SUNGDONG has a shipbuilding debt of more than 3 trillion won (approximately 2.8 billion U.S. dollars).
SUNGDONG shipbuilding creditors believe that the liquidation value of SUNGDONG shipbuilding is more than three times that of its continuing operations, so a better option is to abandon this troubled shipyard. Given its liquidity shortage, SUNGDONG Shipbuilding is unlikely to fulfill its repayment obligations in the first half of this year.
SUNGDONG Shipbuilding received the first new ship order in 2004. It was once ranked among the top 10 ship companies in the world by order quantity. Its export value reached the peak of USD 1 billion in 2009. However, since 2010, SUNGDONG shipbuilding has also begun to fall into financial difficulties. In April 2010, SUNGDONG Shipbuilding and creditors signed a voluntary reorganization agreement.elbow
Since 2010, SUNGDONG Shipbuilding has received nearly 4 trillion won (about US$3.74 billion) in capital injections, including 2.5 trillion won in loans and 1.5 trillion won in debt-to-equity swaps. Among them, South Korea Import and Export Bank, the main creditor of SUNGDONG shipbuilding, issued a 2.1 trillion won loan and converted 1 trillion won into debt.flange
Earlier this month, the Korean government stated that through a court-led reorganization, SUNGDONG Shipbuilding could retain the company name and some of its dockyards and transform it into a shipyard engaged in ship repairs, subassembly or hull section construction.