(2nd LD) Creditors temporarily OK debt rescheduling plan for C&Heavy

(ATTN: MODIFIES throughout; ADDS C&Group's self-rescue efforts, closing stock price
in final three paras)
SEOUL, Dec. 3 (Yonhap) -- Creditors of C&Heavy Industries Co., a shipbuilding
affiliate of South Korea's C&Group, said Wednesday they temporarily approved a
plan to reschedule debts owed by the shipbuilder.
The creditors, led by Woori Bank, said they would allow C&Heavy to defer its debt
repayment and provide fresh loans by Feb. 13 next year and conduct a due
diligence to "normalize operations" of the heavily indebted shipbuilder.
However, the creditors did not specify how the debts would be reorganized.
Under the period of due diligence, creditors will consider whether to rescue
C&Heavy, a source close to the creditors said.
Unless other creditors agree on the plan to normalize C&Heavy's operations during
the due-diligence period, the shipbuilder will face liquidation or be put up for
sale, the person said.
"If new loans are offered, creditors will have to find who should take the
responsibility of management failure," the person said, adding "If creditors
burdened, the plan will return to the starting point."
The move underscores the financial difficulties that smaller shipbuilders in
South Korea face as they find it increasingly difficult to get new loans amid the
global credit crisis.
C&Heavy has liabilities of 550.3 billion won (US$38.3 million) owed to 21 creditors.
For months, C&Group has tried to unload its loss-making affiliates, including
C&WooBang Construction Co. and C&WooBang Land Co. to ease the group's liquidity
concerns.
Hit by the credit squeeze, C&Heavy has halted production at its shipyard in
Mokpo, about 400 kilometers southwest of Seoul, since August.
After the news that creditors temporarily approved the debt-rescheduling plan,
shares of C&Heavy jumped 14.65 percent to close at 900 won, compared with a 0.05
percent decline in the benchmark stock index.
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