* Proposal is condition of state-run banks’ $2.6 bln bailout
* Other major bondholders expected to greenlight proposal
By Joyce Lee
SEOUL, April 17 (Reuters) - A South Korean pension fund on Monday accepted a debt-to-equity swap proposal for bondholders of troubled Daewoo Shipbuilding & Marine Engineering , greenlighting the country’s latest plan to bail out the world’s largest shipbuilder.
The National Pension Service (NPS), the world’s third-largest pension fund, said early on Monday that “accepting the debt restructuring will be more advantageous to improve the fund’s returns.”
NPS is Daewoo’s single-largest single bondholder, with about 390 billion won out of about 1.5 trillion won in bonds, Yonhap reported.
The South Korean government suggested in March that bondholders, which hold about 1.5 trillion won of Daewoo debt, agree to a 50 percent debt-to-equity swap and a three-year grace period on the remaining, as a condition for state banks to provide a fresh $2.6 billion bailout to save the shipbuilder.
Enough remaining bondholders still need to approve the debt-to-equity swap in the series of bondholder meetings to be held on Monday and Tuesday, but other large bondholders including Korea Post are expected to follow NPS’ lead to approve the proposal, creditor bank officials said on Sunday.
The officials declined to be identified because of the sensitivity of the matter.
With this, South Korea is closer to its goal of bailing out Daewoo Shipbuilding, with an estimated 50,000 jobs at risk and billions of dollars in an economic hit if it should topple.
Reporting by Joyce Lee; Editing by Peter Cooney