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DSME union agrees on restructuring.

Union members at Daewoo Shipbuilding and Marine Engineering (DSME) have agreed to fully cooperate with the company's self-rescue plan, a baseline condition that the debt-ridden shipyard's creditors demanded in return for financial help.

DSME said Thursday in a press release that the company's union members have decided to work together with the company for management normalization, and submitted a letter of confirmation with its creditors led by the state-run Korea Development Bank (KDB) and Export-Import Bank of Korea (Eximbank).

The self-rescue plan includes massive layoffs, but DSME labor union head Hong Seong-tae said, "We made the decision to submit the letter in order to prevent court receivership and protect the workers' jobs and their right to live."

Under the scheme, the KDB and Eximbank are expected to carry out a recapitalization plan worth a total of 2.8 trillion won as planned, paving the way for the ailing shipbuilder to avoid court receivership and gather momentum for its revival.

Of the 2.8 trillion won, the KDB will execute a 1.8 trillion won debt-equity swap while Eximbank buys perpetual bonds worth the remaining 1 trillion won to be issued by DSME in a bid to help it raise capital.

The government has imposed pressure on union members working at DSME to support a creditor-led restructuring plan, stressing they should participate in the self-rescue efforts under the principle of "sharing pain" among stakeholders.

"DSME workers should face the grim reality," Financial Services Commission Chairman Yim Jong-yong said at a meeting on the nation's corporate restructuring campaign earlier this week.

Union members at DSME had strongly opposed the plan, claiming the government and the government-appointed executives should be responsible for the company's lousy management, but eventually gave in as creditors implied court receivership if the labor union does not comply with the plan.

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Publication:The Korea Times News (Seoul, Korea)
Date:Nov 18, 2016
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