By Heejin Kim and Kyunghee Park

(Bloomberg) — South Korea mentioned it would take extra energetic steps to assist the nation’s transport and shipbuilding industries cut back debt and climate a worldwide droop.

Lenders will often assessment progress of restructuring plans which might be submitted by transport traces and builders, together with Hyundai Merchant Marine Co. and Daewoo Shipbuilding & Marine Engineering Co., the Financial Services Commission mentioned in an e-mailed assertion on Tuesday. Mergers among the many nation’s greatest corporations within the two industries are inappropriate, in response to the assertion.

A plunge of greater than 50 p.c in oil costs prior to now two years has roiled South Korea’s shipbuilders, which reported losses final 12 months amid supply delays and cancellations. Orders for brand new vessels have shrunk, whereas transport liners battling losses or smaller income are paring their workforce and contemplating consolidation after years of overcapacity depressed freight charges.

“The focus of the restructuring is to deal with overcapacity and loss of competitiveness for companies involved,” Yim Jong Yong, the fee’s chairman, mentioned at a briefing in Seoul. “Companies and creditor banks can’t do this alone. We all need to work together and fast to make this happen.”

Charter Rates

Hanjin Shipping Co. and Hyundai Merchant Marine, the nation’s two greatest container carriers, must decrease constitution charges for ships they’ve leased from shipowners and attain an settlement with particular person bondholders to restructure the debt earlier than collectors begin offering assist, the fee mentioned.

Reducing constitution charges will likely be very important for Hyundai Merchant’s survival, Yim mentioned, including that it has till the center of May to barter the charges. Freight charges have declined 25 p.c this 12 months, the fee mentioned.

A realignment in international transport alliances just lately has elevated the urgency for Hanjin Shipping and Hyundai Merchant to enhance their financials, the fee mentioned.

Last week, CMA CGM SA, Cosco Container Lines, Evergreen Line and Orient Overseas Container Line signed a preliminary settlement to type a brand new group, making it the second-biggest on the earth after a partnership between A.P. Moeller Maersk A/S and Mediterranean Shipping Co.

Additional Plan

Daewoo Shipbuilding might want to submit extra reform plans to collectors, together with extra job cuts, the fee mentioned. Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. will likely be required at hand in their very own plans, which will likely be intently monitored by their banks.

The authorities can also be monitoring the metal, petrochemical and development industries to make sure they continue to be aggressive, the fee mentioned.

State-run lenders would want to spice up their capital to facilitate the restructuring and there will likely be discussions on how the Bank of Korea can support this, Yim mentioned. The central financial institution, in a textual content message on Tuesday, mentioned it would assessment what function it could possibly play when there are particular requests.

South Korea undertook a number of steps earlier to assist corporations affected by oversupply and slowing demand.

The authorities mentioned in December it plans to work with collectors to arrange a $1.2 billion fund to assist native transport corporations pay for brand new vessels they’ve ordered, in response to the Ministry of Oceans and Fisheries. The authorities additionally will push shipyards to downsize and give attention to their core companies, and can search to shut or promote these that may’t survive on their very own.

© 2016 Bloomberg L.P