South Korean Hyundai Heavy Industries (HHI) has joined its compatriot companies today by submitting a self-rescue plan to creditors, Yonhap news agency reports.
The restructuring plan reportedly includes further job cuts and asset sales worth up to USD 1 billion.
Previously, reports emerged that the shipbuilder’s self-help measures are to include slashing of 10 percent of its workforce, reaching up to 3,000 jobs, along with disposing off non-core assets, nearly 100 of its 390 business divisions.
However, responding to market rumors, HHI said yesterday in an exchange filing that it was not considering a pre-IPO of refining unit Hyundai Oilbank as part of its restructuring plan.
At the end of April, the shipbuilding giant revealed that it had laid off 25 per cent of its executives as a first step within the framework of its massive job-cutting plan.
The latest round of cost reduction measures follows a 42.2 percent fall in new orders at the company for the first quarter of 2016 year-on-year, with only five orders in the bag.
The company’s shipbuilding business took a big blow with 63.2% lower orderbook reaching USD 234 million in Q1, 2016.
The country’s shipbuilders, badly hit by the ordering slowdown prompted by shipping and offshore industry woes, have been very busy since the beginning of the year with activities aimed at boosting their liquidity and slashing losses accrued over the past year.
These include Hanjin Heavy Industries & Construction Co. (HHIC) which has just signed a Memorandum of Understanding (MoU) on business normalization plan with its creditors, led by the Korea Development Bank.
The state-run bank has also urged the country’s shipbuilder Samsung Heavy Industries to devise a number of self-rescue measures.
The move from the South Korean government comes amid the need to push harder for the restructuring of vulnerable industries which were affected by a global slowdown to reduce overcapacity and boost long-term competitiveness.
Under a three-track plan revealed recently by the country’s financial regulator, the Financial Services Commission, Daewoo Shipbuilding & Marine (DSME), one of the country’s big 3 shipbuilders, will be required to submit layoffs and cost savings, while the other two, HHI and SHI, would have to pursue self-rescue plans with their creditor banks.
World Maritime News Staff