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DSME successfully sells off Mangalia’s Shipyard
Wednesday, November 15, 2017, 12:40:51 Paul Yoon ckyoon7@paran.com
DSME has successfully sold off its subsidiary Daewoo Mangalia Heavy Industries (DMHI) based in Rumania. DSME’s self-help measures are expected to get more momentum in normalizing its operation from the sale.

DSME said on Nov. 10 that it has inked an SPA on DMHI’s stocks with Damen Shipyards Group, Netherland’s top-class shipbuilder. 51% equities in DMHI held by DSME is to be sold to Damen for KW29 billion. DSME and Damen were set to finalize SPA by Nov. 9.

DSME will get a big relief from financial burden through the sale of DMHI this time. Mangalia Shipyard was a joint-venture firm established between DSME and Rumanian state-run 2MM (2 Mai Mangalia Shipyard) in 1997. Within 4 years from the establishment, the shipyard has rapidly grown to be selected as one of Rumania’s top 10 enterprises, but it has suffered from the global financial crisis since 2008 with short orders, production delays and accumulated losses resulting in its capital completely eroded.

As a result, DSME has fully written off its 51% equities in DMHI as loss, and reserved some money for potential loss, hereby doing utmost to minimize risks. At the same time, it has strengthened its competiveness by reducing manpower, seeking all other restructuring measures including sales/disposal of assets and conversion of some shipbuilding into ship-repairs.

DSME and Damen have been pursuing discussion on sale and purchase of DMHI since the beginning of 2016. Though there were a number of hurdles in talks due to economic slumps in Rumania and to the stalling recovery in shipbuilding markets, two shipyards have finally inked SPA on DMHI stocks, taking one year and six months of hard negotiation.

As a result of DMHI sale, DSME is well placed to focus on its management normalization centering Okpo Shipyard. A DSME official said, “With the burden of its financial support to DMHI relieved, DSME’s financial structure will get solider.” In addition, the sale proceeds are expected to also improve its profitability.

Meanwhile, of its self-help accumulated sale target of KW2.77 trillion to be achieved by the end of 2017, DSME has already fulfilled 90% of the target namely KW2.48t. Its total accumulated self-help sale target up to 2020 is KW5.9t. It will strictly comply with implementation of the self-help plan agreed with creditor banks through extra sales of subsidiaries.
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