South Korea's state-run creditors of Daewoo Shipbuilding & Marine Engineering (DSME) have announced a set of rescue packages worth 5.8 trillion won (US$5.17 billion) for the ailing shipbuilder Yonhap reported. DSME, which has been hurt by massive losses from its offshore projects, will receive new loans worth 2.9 trillion won ($2.6 billion) from state-run Korea Development Bank and Export Import Bank of Korea, if lenders and bondholders agree to swap 2.9 trillion won of debts for new shares in the shipbuilder. Financial Services Commission (FSC) said that Daewoo cannot redeem $840.49 million in corporate bonds maturing this year due in April. Bondholders and other creditors, however, will have to agree to painful debt-for-equity swaps for the FSC's 2.9 trillion won bailout plan to go through. "If private lenders and bondholders disagree on the debt-for-swap plan, we will implement an intensive restructuring program by using legally binding measures," the creditors said in the statement. Daewoo Shipbuilding could face a cash shortage over the next two years of as much as 5.1 trillion won in the current environment, the statement showed. The company received a meagre $1.6bn worth of new orders last year, far short of its $6.2bn target. Daewoo Shipbuilding is expected to face gloomy earnings this year because of its heavy reliance on offshore orders, which have dropped due to a fragile recovery in the global economy.
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