In Shipbuilding News 28/06/2016
Source: Yonhap
Samsung Heavy Industries Co. said it will hold a special shareholders’ meeting in August to clear the way for a capital increase aimed at helping the troubled shipyard stay afloat.
Samsung Heavy said its board of directors decided to convene the meeting on Aug. 19 to approve a proposal to increase the maximum number of shares it is legally permitted to issue, a precondition for the crucial capital raise.
Under its articles of incorporation, Samsung Heavy is currently allowed to float up to 240 million shares, and it has already issued 231 million.
The decision comes after Samsung Heavy, a unit of South Korea’s top conglomerate Samsung Group, unveiled a plan on June 9 to seek to raise its capital through a share sale as part of self-rescue efforts.
Samsung Heavy said it has yet to decide on the size, timing and method of the capital increase. Industry watchers predict Samsung Heavy’s capital increase to reach about 1 trillion won (US$846 million), and the company will likely sell new shares to affiliates and other shareholders.
Samsung Electronics Co., the group’s flagship, is the leading stakeholder in the shipyard with 17.62 percent, and other affiliates, such as Samsung Life Insurance Co. and Samsung SDI Co., also own stakes. Some market observers speculate that Samsung Electronics Vice Chairman Lee Jae-yong, the group’s heir apparent, may buy Samsung Heavy’s new shares.
Shares of Samsung Heavy closed 0.11 percent up at 8,900 won on South Korea’s main bourse on Monday.
The envisaged stock sale is part of Samsung Heavy’s 1.5 trillion won self-help package aimed at pulling the company out of its cash crisis. The package, approved by its creditors, calls for the company to cut 1,500 jobs this year, sell non-core assets and suspend part of its production facilities, including floating docks, in gradual phases to cope with a fall in new orders.
Meanwhile, a council of workers at Samsung Heavy’s shipyard in Geoje on the south coast said Monday that some 6,000 members will hold a vote Tuesday on whether to go on strike to protest the reform measures. The company doesn’t allow a labor union.
Samsung Heavy is one of South Korea’s three major shipyards reeling from snowballing losses caused by falling global demand and tougher competition. The Seoul government and creditor banks, including state-run Korea Development Bank, have called for “bone-crushing” reform efforts, including massive job cuts.
Source: Yonhap
