(Repeats for wider distribution)
* Proposal is condition of state-run banks' $2.6 bln bailout
* Other major bondholders expected to greenlight proposal
By Joyce Lee
SEOUL, April 17 A South Korean pension fund on
Monday accepted a debt-to-equity swap proposal for bondholders
of troubled Daewoo Shipbuilding & Marine Engineering
, greenlighting the country's latest plan to bail out
the world's largest shipbuilder.
The National Pension Service (NPS), the world's
third-largest pension fund, said in a statement early on Monday
that "accepting the debt restructuring will be more advantageous
to improve the fund's returns."
NPS is Daewoo's single-largest bondholder, with about 390
billion won ($343.5 million) in bonds, Yonhap reported.
The South Korean government suggested in March that
bondholders, which hold about 1.5 trillion won of Daewoo debt,
agree to a 50 percent debt-to-equity swap and a three-year grace
period on the remaining, as a condition for state banks to
provide a fresh $2.6 billion bailout to save the shipbuilder.
After marathon negotiations between NPS and the state-run
Korea Development Bank and Export-Import Bank of Korea,
last-minute concessions by the state banks including putting
bond payments into an escrow account before maturity and
effectively pledging to pay bondholders before their own claims
to Daewoo, led to NPS' approval.
Enough remaining bondholders still need to approve the
debt-to-equity swap in the series of bondholder meetings to be
held on Monday and Tuesday, but other large bondholders
including Korea Post are expected to follow NPS' lead to approve
the proposal, creditor bank officials said on Sunday.
The officials declined to be identified because of the
sensitivity of the matter.
With this development, South Korea is closer to its goal of
bailing out Daewoo Shipbuilding, with an estimated 50,000 jobs
at risk and an economic hit of tens of billions of dollars if it
The government plans to sell Daewoo after reducing its size
to about 7 trillion won in two years from about 13 trillion won
in revenue last year, KDB Chairman Lee Dong-geol told reporters
Already bailed out in the aftermath of the Asian financial
crisis of the late 1990s and supported again in 2015, Daewoo's
financials have deteriorated rapidly since then partly because
of low oil prices causing delays in payments for complex
offshore facilities. It reported a record net loss of 3.3
trillion won in 2015.
($1 = 1,135.3500 won)
(Reporting by Joyce Lee; Editing by Peter Cooney)