[Courtesy of Hyundai Heavy Industries]
South Korea's Hyundai Heavy Industries has finally secured a refund guarantee from South Korean banks, paving the way for the world's largest shipyard to hunt for orders and build ships more actively than now.
Due to concerns about heavy exposure to snowballing debts and bad loans in South Korea's shipbuilding and shipping sectors, banks have been reluctant to provide refund guarantees for new shipbuilding orders.
Given that a shipowner will normally pay for a substantial part of the vessel in advance of delivery, the refund guarantee provides a form of security in respect of those instalments.
In early August, Hyundai Heavy secured an important order from a Greek shipping company to build two very large crude carriers estimated at 180 million US dollars, but banks have delayed a decision on their refund guarantee.
South Korean shipyards have been struggling with a protracted slump in the global shipbuilding industry. Oil companies have reduced spending while rig owners have canceled orders or asked for delayed ship delivery.
This year, Hyundai Heavy and two other leading local shipyards were put under creditor-led restructuring this year. Three weeks ago, Hyundai closed one of its 11 dry docks for the firs time in its history due to a dwindling backlog of orders.
In the first seven months of this year, the Hyundai shipyard has secured orders worth 1.2 billion US dollars for nine ships, down 71 percent from a year earlier.
Last month, Norwegian offshore drilling rig company, Fred. Olsen Energy, has agreed to end a dispute over the delayed delivery of a semi-submersible drilling platform built under a $700 million contract.
This month, Hyundai Heavy was assured of a 337 million US dollar order to build two frigates for the Philippines.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
