[ Halla Shipbuilding Unit Reborn as ‘Samho’ ]

Bankrupt Halla Engineering&Heavy Industries has been separated from th
e parent group and will operate under the mane Samho Engineering & Hea
vy Industries. Hyundai Heavy Industries (HHI) will manage the new comp
any under a commission-based management plan, until Samho generates en
ough profits to redeem its debts. Rotyschild-Halla (RH) Engineering &
Heavy Industries, a company which is serving as a bridge institution t
o rescue Halla, said Lee Yeon-soo, HHI president in charge of offshore
plant business, has been named president of Samho.
RH Engineering was set up last year under the U.S. investment firm Rot
hschild’s loan program, after Halla Engineering went bankrupt along w
ith other group affiliates. Samho and HHI are expected to sign a forma
l contract for commissioned management shortly. Under the agreement, H
alla’s creditors will convert 100 billion won of debt in the troubled
shipbuilder into the corresponding amount of equity. That will leave
Samho with 650.5 billion won of debt outstanding, and HHI will guarant
ee payment of an amount equal to 130 percent of the remaining debt. In
turn, Samho will pay a commission to HHI equal to 10% of annual net p
rofits. Senior executives from Samho plan an overseas roadshow to woo
shipowners, angry at recent difficulties at the yard. The trip is main
ly aimed at heading off the threat of legal action by shipowners for p
ossible breach of contrant after the yard’s management sought to canc
el up to 10 newbuilding contracts and options in September. The execut
ives hope to renegotiate the contracts to reflect the relatively highe
r newbuilding prices that exist now compared to a year or two years ag
o. The roadshow will take in the U.S., Greece and Hong Kong.