Korea Development Bank, the largest shareholder of Daewoo Shipbuilding & Marine Engineering, said that it is inevitable for the shipbuilder's overseas affiliates including Daewoo Mangalia Heavy Industries and DeWind to be liquidated. Given the situation in which DSME must reflect a quarterly operating loss of more than 3 trillion won to its books, the bank decided there is no other way but to abandon the units.
Although DSME president Jung Seong-rip had earlier said his company would restructure all subsidiaries unrelated to shipbuilding, the principal creditor took this a step further by including a shipbuilding unit.
Korea Development Bank said on July 22 by citing a report submitted to Rep. Lee Jae-young (New Frontier Party), "Daewoo Mangalia and DeWind are unable to continue as going concerns and need liquidation. In the process of liquidation including working capital injection and actualization of loan guarantees, a large loss may occur." A Korea Development Bank official explained, "Even though it will be made clear only after due diligence as to whether to restructure overseas units, it seems liquidation would be the only way out."
Daewoo Mangalia is a Romanian shipbuilder acquired jointly by DSME and the Romanian government in 1997. Daewoo paid 44.8 billion won for the 51-percent stake in the company. Although the company was expected to play the role of a beachhead to the European market for Daewoo Shipbuilding, the Romanian subsidiary has had so many years in which it secured no ship or fewer than five ships in a year. As of the end of 2014, its total debt was 1,287.8 billion won, much higher than its assets of 752.8 billion won.
In addition to Daewoo Mangalia, Daewoo Shipbuilding must deal with DeWind, a U.S. wind power unit. Daewoo acquired the Irving (Texas)-based company in 2009 with a plan to nurture it as a centerpiece of its wind power business. But the unit has suffered from poor results since the acquisition. Its sales revenue shrank to 14.8 billion won last year from 180.4 billion won in 2012. Daewoo Shipbuilding provided loans of US$55.7 million (64.3 billion won) to DeWind, with an additional loan guarantee of $35.9 million (41.4 billion won).
