The labor union of embattled Daewoo Shipbuilding & Marine Engineering Co. said Friday that it is willing to accept a proposed pay cut for workers from the shipyard's creditors, proposing four-party talks aimed at helping the shipyard stay afloat.
The labor union's action came a day after the country's state-run creditors of the shipyard, the world's largest by order backlog, announced a fresh rescue package worth 6.7 trillion won ($5.98 billion) to the ailing shipbuilder, but only if all stakeholders agree to a painful debt-for-equity swap plan.
(Yonhap)
The huge rescue measures, proposed by the state-run Korea Development Bank and Export-Import Bank of Korea, are the second round of bailout for the shipbuilder that has been suffering severe liquidity problems over heavy losses from offshore projects.
Daewoo Shipbuilding will be required to cut 25 percent of its personnel costs and slash its workforce by 1,000 jobs, the creditors said.
The fresh rescue package also calls for the labor union of Daewoo Shipbuilding not to stage a strike.
"Recently, we are informed of a 10 percent pay cut from the management, and we do acknowledge that there are some reasons (for that)," the union said in a statement. "We make it clear that the labor union and the management should sit together to discuss how to handle it."
The labor union proposed talks with the government, the management and the creditors to find ways of salvaging the cash-strapped shipbuilder.
The Financial Services Commission (FSC), the country's financial regulator, warned that Daewoo Shipbuilding will face bankruptcy unless fresh funds are injected into the shipbuilder.
If Daewoo Shipbuilding files for bankruptcy, the FSC said it would lead to a loss of 50,000 jobs and affect about 1,300 sub-contractors.
The shipbuilder suffered an operating loss of 1.61 trillion won ($1.44 billion) last year following an operating loss of 2.94 trillion won in 2015.
Its net loss narrowed to 2.71 trillion won last year from a loss of 3.3 trillion won a year earlier with sales also dipping 15.1 percent on-year to reach 12.74 trillion won, it said.
The pending and sticky problem facing Daewoo Shipbuilding is how to pay off 440 billion won worth of debt due next month. It has to refinance or pay off a total of 940 billion won worth of debt this year and 550 billion won next year. (Yonhap)