South Korean shipbuilder Samsung Heavy Industries revealed a KRW 1.5 trillion (USD 1.36 billion) rights offering plan in an effort to improve its financial structure.
The new shares will be issued by May 2018, the company said in a stock exchange filing.
With the capital increase, the financially-troubled shipbuilder intends to pay corporate bonds and other debts maturing in 2018. What is more, the move comes as a preemptive response to an additional reduction in borrowings due to bad performance, Yonhap News Agency reported.
Following the announcement of SHI’s share issue plan, shares of the company have decreased by around 30 percent on Korea Exchange, hitting the lowest point in a year.
Separately, the shipbuilder said that it could narrow its operating loss to KRW 240 million in 2018 from KRW 490 billion forecast for this year.
In the third quarter of 2017, SHI saw its earnings drop mainly due to deliveries of low-priced vessels and a decrease in orders.
The shipbuilder’s net income for the three-month period ended September 30 plunged by 82 percent to KRW 23.4 billion (USD 21 million) from KRW 128.6 billion (USD 115.5 million) reported in the same period a year earlier. Operating profit for the quarter was KRW 23.6 billion, compared to an operating profit of KRW 84.1 billion seen in the corresponding period of 2016.
In mid-2017, Samsung Heavy Industries (SHI) unveiled its self-rescue plan, under which it would undertake workforce cuts through an early retirement scheme, and seek from its executives to return part of their salaries.
World Maritime News Staf