Vietnam offers loans to ailing shipbuilder Vinashin

Vinashin's logo at its headquarters in Hanoi on 19 July 2010 The Vietnamese government says it will not bail Vinashin out

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The Vietnamese government says it will offer interest-free loans to shipbuilder Vinashin to pay salaries, after the company failed to make the first repayment of a big foreign loan.

Vinashin is one of Vietnam's largest state-owned companies.

But over-expansion took it to the brink of bankruptcy and it is now being restructured.

Vietnam's sovereign credit rating was recently downgraded, partly because of Vinashin's troubles.

Vinashin - also known as Vietnam Shipbuilding Industry Group - ran up debts of about $4.5bn (£2.8bn) after a period of rapid expansion.

On 20 December it missed the first repayment of a $600m loan arranged by Credit Suisse in 2007. It is reportedly seeking a one-year delay in repayments.

The Vietnamese government has said it will not bail out the shipbuilder, which employs tens of thousands of workers.

But the interest-free loans - from the state-owned Development Bank of Vietnam - will pay salaries and workers' insurance, the government said in a statement late on Monday.

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