KOSUN, Proactive Fundraising Secured in Preparation for Improvement in Shipbuilding Industry Conditions

K Shipbuilding announced on the 31st that it has proactively completed large-scale financing to prepare for a shortage of working capital as the shipbuilding industry shows a clear trend of improvement.

Exterior view of K-Chosun.

Including 30 billion KRW in financial support from the major shareholder in June, the company successfully secured a total of 110 billion KRW, raising 80 billion KRW from external institutions on the 30th.

Despite the clear recovery in order volume due to the improvement in the shipbuilding market, the heavy tail payment method, where the balance is paid upon delivery of the ship, is still maintained, which is expected to increase the burden of working capital. Through this financing, K Shipbuilding expects to alleviate the working capital burden.

Furthermore, despite the manpower supply issues in the shipbuilding industry, since no Liquidated Damages (LD) have occurred, it is anticipated that financial conditions will improve in 2024 when profitable ships are constructed.

According to Clarkson Research, a UK-based shipbuilding and shipping market analysis firm, the newbuilding price index in August reached 173.55, the highest level since the shipbuilding boom in 2008, increasing by 11.4 points compared to the same period last year. Clarkson Research’s newbuilding price index sets the ship price in January 1988 as 100 and compares prices monthly; an index above 100 indicates rising ship prices, boosting expectations for a return to a shipbuilding boom.

In particular, the price of K Shipbuilding’s main vessel, the 50,000-ton petrochemical product carrier, rose by 8% year-on-year, driving the increase in the newbuilding price index.

A representative of K Shipbuilding stated, “While the BIG3 shipbuilders already have their slots fully booked for the next three years, K Shipbuilding has relatively more available construction slots. We will further enhance profitability through selective order intake for the remaining slots.”