South Korea’s financially-troubled Daewoo Shipbuilding & Marine Engineering Co. (DSME) has decided to sell its catering subsidiary Welliv Co. and reduce office space as part of efforts to expedite its normalization with a government-led fresh $6 billion debt relief and bailout package set to go.

DSME said in a regulatory filing on Thursday that its board of directors has approved the plan of selling a full stake in Welliv to a private investment firm. The deal is expected to raise 65 billion won ($58.2 million) worth of funds.

Welliv is a subsidiary of DSME that not only runs cafeterias for DSME shipyards but also provides security and transportation services. The lucrative unit posted 11.6 billion won in operating profit on sales of 214.7 billion won in 2015 and 5.9 billion won in operating income on sales of 191.0 billion won in 2016.

Following the board’s approval, DSME aims to sign the final contract with the buyer by early next month.

The company’s announcement comes weeks after the last stumbling block for the $6 billion worth government-led bailout package for DSME was lifted.

As a local high court earlier this month rejected appeal from a group of individual investors opposing the government-recommended debt rescheduling plan, DSME was finally set to receive fresh funding of 2.9 trillion won pledged by state lenders and rescheduling in existing 3.9 trillion won debt through debt-to-equity swap, rollover and lower rates from all private lenders and bondholders.

Besides the government-led bailout program, DSME has rolled sleeves to speed up its self-rescue plan. On top of the sale of Welliv, DSME has also decided to reduce it office space to save rent cost. Currently, the company uses 17 floors of its office building in Seoul, but it will lease only 10 floors when the current lease term ends. Following the company’s efforts to streamline its workforce through a series of voluntary retirement programs and overlapping divisions and organizations, less work space is now required. The reduction in office space is expected to help the company save about 9 billion won annually.

Of the plan to raise 5.3 trillion won in funds through its self-rescue plan, DSME has managed to secure 2 trillion won as of the end of last month, an unnamed official at the company said. Separately, DSME plans to put another unit DSME Construction Co. up for sale again in the second half of this year after it failed to find a new owner for the construction unit in its first attempt.

By Moon Ji-woong

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]