Embattled Samsung Heavy Industries said Tuesday it will push for a capital increase as soon as its shareholders raise the upper limit of stock for sale in August, which is part of its 1.5 trillion won ($1.28 billion) restructuring plan.
Samsung Heavy, a unit of South Korea's top conglomerate Samsung Group, unveiled the self-rescue program earlier this month, including stock sales and job cuts, as it grappled with falling freight rates amid slackened global demand and tougher competition.
"We will raise share capital as soon as possible because it is not easy to get new funds in the current circumstances," CEO Park Dae-young told reporters after an economic forum, without elaborating on the size and method of the stock sale. "Banks are also strongly demanding (capital increase)."
Before increasing its stocks, the company has to increase the maximum number of shares it is legally permitted to issue in a shareholders' meeting slated for Aug. 19. Under its articles of incorporation, Samsung Heavy is currently allowed to float up to 240 million shares, and it has already issued 231 million.
Industry watchers predict the company could raise about 1 trillion won by selling new stocks to its affiliates.
Samsung Electronics, the group's flagship, is the largest stakeholder in the shipyard with 17.62 percent, and other affiliates, such as Samsung Life Insurance and Samsung SDI, also own stakes.
Park didn't comment on whether Samsung Electronics Vice Chairman Lee Jae-yong, the group's heir apparent, and other affiliates have any plans to buy Samsung Heavy's new shares.
The self-rescue package, approved by its creditors, calls for the nation's No. 3 shipyard to cut 1,500 jobs this year, sell non-core assets and suspend part of its production facilities, including floating docks, in gradual phases to cope with a fall in new orders.
Shares of Samsung Heavy rose 4.16 percent to close at 9,270 won on the Seoul bourse on Tuesday, outperforming the broader market's 0.49 percent rise.
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