NEWS / December 26, 2008

‘Fatal Day’ for Korean shipbuilders
December 29’ will be this year’s last ‘D-day’ for South Korean shipbuilding industry. On the day, creditors of C& Heavy Industries will decide on whether to provide fresh loans to the ailing shipbuilder. Also, the formal contract for Daewoo Shipbuilding & Marine Engineering (DSME) sale is scheduled to be signed on the same day. Especially, small and medium sized shipbuilders are keeping a close watch on the decision of banking agencies over C& Heavy bailout as the decision could become a benchmark for the restructuring of 26 S&M sized shipbuilders scheduled to be take place early next year. Large shipbuilders are also on the watch for DSME sale as it can cause a shake-up in the shipbuilding industry. Early this month, the creditors of C& Heavy temporarily approved a plan to reschedule debts owed by the shipbuilder and provide fresh loans at the beginning of next year. But they are now in dispute on the allotment of the financial support. On December 29, C& Heavy’s destiny will be decided by a documentary resolution without meeting and if 75% of the creditors agree to rescue the shipbuilder, it will eventually get the new loans. On December 23, Hanwha Group, the preferred buyer for a controlling stake in DSME, requested Korea Development Bank (KDB), DSME’s top shareholder, to delay payment for the acquisition, which is slated by the end of March next year. After the proposal, KDB said, “a delay will be impossible.” Accordingly, whether the formal contract would be signed on December 29 remains to be seen. If the contract is concluded, Hanwha would pay additional KRW 300bn (USD 228m) and the deal would turn the corner.



China shores up shipbuilders
The Ministry of Industry and Information Technology of China (MIIT) is planning to release some policies to shore up the nation's shipbuilders, mainly with the help of domestic financial institutions.China's major shipbuilders last Sunday talked with eight financial institutions like The Export-import Bank of China and China Development Bank, for the financial support to the shipbuilders. Now, the related policies are being made but the details cannot be disclosed, according to people close to the issue. The nation's shipbuilding industry should focus on three aspects now, said a top MIIT official said. One is to guarantee orders; one is to adjust structure and boost development; and the last one is to enhance innovation in the industry. The policies will not be complicated and concrete, but it is sure that the financial institutions would back up the shipbuilders, said an expert at the China Shipbuilding Economy Research Center.



Mediterranean's largest shipyard only months away
The Besiktaş Shipping Group, a leading company in the Turkish maritime business, will soon complete preparations and begin constructing a shipbuilding facility in the Adana-Yumurtalık Free Trade Zone. Once complete, the shipyard will be the largest of its kind in the Mediterranean Basin. İhsan Kalkavan, the owner and chairman of the Beşiktaş group and a former manager of the Beşiktaş Soccer Club, said his company began preparations eight months ago after obtaining a license to build a shipyard in the region. It then rented 300,000 square meters of land and applied for an Environmental Impact Report (ÇED). Speaking to the Anatolia news agency yesterday, Kalkavan said he estimates the ÇED will be ready by the first week of January. He said construction will likely start by February or March. The shipyard will occupy 100,000 square meters of land and 300,000 square meters of sea. It will also have two pools, one of which will be 400 meters long and 70 meters wide while the other will be 350 meters long and 70 meters wide. These pools will be used for supertankers exceeding 300 meters in length that need repairs. "The shipyard will even be able to handle aircraft carriers," Kalkavan noted, adding that it will have the capacity to repair 100 ships (400,000 deadweight) annually. Construction is scheduled for completion in three years and will likely cost $100 million. The company will use its own resources to finance the project, which is expected to employ 3,000 persons.

CSC won 386TEU orders
According to Chongqing Municipal Commission of Foreign Trade and Economic Cooperation, Chongqing Dongfeng Shipbuilding Corporation (CSC) won a shipbuilding order for four 368TEU container ships from an American shipowner on December 17, 2008.
The vessels have the total length of 106.68 meters, the width of 20.6 meters, the height of 5.8 meters, and the draft of 4.215 meters, and are classed into BV. These vessels will be built in accordance with ‘Performance Standard for Protective Coating’, which means this is CSC’s formal entry into the shipbuilding field of international container ships after the proclamation of the new shipbuilding rules from IMO, and CSC is one of the few shipyards which can follow the new rules at present. It is reported that this is the first order-receipt after company’s technical innovation, as well as the first shipbuilding order taken under the recent international financial crisis which affected the vessel export badly and resulted in almost zero volume of newbuilding delivery.

CSBC completed 12,600TEU
According to the report from United Daily News in Taiwan, Zheng Wenlong, the CEO of CSBC Corporation Taiwan said on December 22 that CSBC had completed the research and development of world’s largest containership.It was ordered by Taiwan’s Yang Ming Line (YML) originally but now the order is on hold due to the recession in shipping industry, he said. Zheng said that CSBC has already become one of the most competitive shipyards in the world after being listed on the stock market. CSBC’s 12,600 TEU containerships 366 meters in length and 48.3 meters in width belong to world’s first class and show Taiwan’s shipbuilding and design capability. It is understood that the largest container ships designed by the world’s largest shipbuilding country South Korea are for 12,500TEU level at present. He said that company strives for public facilities business opportunities including 'Love Taiwan 12 construction projects' in order to disperse the operating risks and enhance profits.