The financial-hedging scheme was thrown badly off course by the plunge in the value of the Korean won.

"With the losses from Kiko and the order drought, 21st Century has now been hit with a liquidity squeeze," confirmed one shipbuilding source.

The yard is said to have only bagged one order last year - from Chinese chemical-tanker owner Sinochem, which signed up for two 20,000-dwt stainless-steel tankers for delivery in the first quarter of 2011.

21st Century is the second Korean yard to have filed for help from KDB, its main creditor. SLS Shipbuilding made a similar application to the bank before Christmas. It is also suffering from severe financial difficulties because of an order drought and cancellations.

One industry observer says KDB will probably take a month or two to evaluate 21st Century's position before it decides whether it warrents assistance. He adds that if the banks assist the yard with a cash injection, its current management will be replaced by personnel appointed by the financiers.

The source strongly believes KDB will approve both yards for the creditor-led restructuring program. "21st Century and SLS Shipbuilding have good reputations. They are known for building quality vessels," he said. "Both yards are still in operation."

source: maritime

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