Meritz Fire rejects capital injection for C&Heavy

SEOUL, Dec. 29 (Yonhap) -- Meritz Fire & Marine Insurance Co. said Monday it could not extend financial support to C&Heavy Industries Co. raising concerns over the revival of the troubled local shipyard.

On Dec. 3, creditors of C&Heavy Industries decided to launch a debt rescheduling
program for the teetering shipbuilder with plans to roll over its debt by Feb.
13.
The insurer notified later in the day Woori Bank, the main creditor of C&Heavy,
that it could not agree to provide 15 billion won (US$11.7 million) in emergency
funds to the shipbuilder.
According to industry sources, creditors have been discussing the supply of the
emergency fund to C&Heavy, but Meritz Fire made the decision as it has to assume
76 percent of the capital injection.
Total exposure by local financial firms to C& Group, a parent group of the
shipbuilder, reached about 1.3 trillion won, out of which 227.4 billion won in
loans were extended by Woori Bank, the sources said.
South Korean shipyards, which secured record orders in recent years due to strong
demand, have been feeling the pinch as the slumping economy and a sharp decline
in new orders, with some smaller shipbuilders such C&Heavy facing severe cash
shortages.
Foreign exchange losses also are one of main factors eating into their
profitability.
sooyeon@yna.co.kr
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