South Korea's state-run Export-Import Bank of Korea said Tuesday it will financially support debt-ridden local shipbuilding and shipping firms.
Eximbank CEO Choi Jong-ku said the policy lender needs to provide financial support to companies that have debt but also have potential to stand on their own feet.
Export-Import Bank of Korea's main office in Seoul. (Yonhap file photo)
However, he did not elaborate on how the bank will help the companies to make a rebound from their current difficulties.
Last month, another policy lender, Korea Development Bank, ruled out additional cash injections into embattled shipbuilder Daewoo Shipbuilding & Marine Engineering Co. This means that the shipbuilding firm will need to pay off or refinance its maturing debt on its own.
The shipyard must pay off or refinance up to 1 trillion won ($869 million) worth of debt that matures this year, but its financial status is not good enough to deal with the situation amid the dearth of new orders and a delay in the delivery of drill ships.
DSME has 440 billion won in debt due in April, 300 billion won in July and 200 billion won in November.
KDB and the Eximbank have so far injected a combined 3.5 trillion won into Daewoo Shipbuilding.
South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals. (Yonhap)