It is forecast that Samsung Heavy Industries (SHI) will raise its capital by one trillion won, a little more than expected by the market. According to industrial sources on July 14, early this week, Samjong KPMG gave the results of its due diligence of SHI to the Korea Development Bank (KDB), the creditor bank of the company,
The due diligence has been conducted for two months at the request of the KDB since May. It was known that the KDB judged SHI’s 1.5 trillion won self-rescue plan appropriate after receiving the due diligence report. But the bank also judged that with reference to the volume of the capital increase, one trillion won should be the minimum. As Samsung Heavy Industries (SHI) announced 1.5 trillion won self-rescue plan last month, the company announced that it will push forward with a capital increase besides the self-rescue plan.
This is because SHI’s decision for the capital increase aimed to equip the company for future uncertainties such as a shortage of liquidity. This means that SHI will increase its capital in preparation for a possible liquidity problem that can be ignited by a delay in the delivery of an offshore plant or the continuation of an order drought.
SHI’s major offshore plant projects including the Ichthys project in Australia are giving an indication of being delayed. As payments are made based on progress rates, if SHI’s projects are delayed, it may hamper SHI’s financial management.
As if to rub salt in the wound, commercial banks are shortening their maturities from one year to three months while extending loans to SHI.
The Original Posted by Michael Herh/Business Korea