The key creditor of Daewoo Shipbuilding & Marine Engineering said Tuesday it would unveil bailout measures that may include capital injection of some 4 trillion won ($3.5 billion) for the beleaguered shipbuilder as its union accepted the proposed self-rescue plan.

The country’s second-largest shipbuilder has cleared a major hurdle for its normalization process as its union submitted a letter of consent on a wage freeze and a moratorium on strike activities until the business gets back on track to the main creditor Korea Development Bank.

“We will hold a board of directors meeting to vote on the normalization measures for Daewoo Shipbuilding on Thursday,” a KDB official said.

The state-run KDB and other creditors are mulling an injection of 4.3 trillion won, including a capital increase of 1 billion won to 2 billion won and a debt-for-equity swap, according to sources.

The union, which initially opposed the self-rescue plan, reached an agreement late Monday after a series of marathon negotiations as the creditors threatened that the company could filed for court receivership.

“We had to make a tough decision for the sake of 50,000 unionized workers’ rights of living,” the union’s head said in a press release.

The move comes as Daewoo Shipbuilding struggles with fewer orders as a sluggish global economy and low freight rates discourage operators from buying new vessels, which resulted in its worst-ever operating loss of 3.03 trillion won in the second quarter.

On Tuesday, the firm posted a third-quarter operating loss of 1.21 trillion won and expects a 1 trillion won deficit in the fourth quarter.

The firm also blamed delays in offshore rig projects for the largest deficit, which is also troubling other major shipbuilders including Hyundai Heavy Industries and Samsung Heavy Industries.

The three firms shifted their focus to deep-sea drilling rigs and production facilities after the global financial crisis dampened orders and Chinese shipyards outpriced them.

According to industry data, the three shipbuilders’ combined losses from offshore projects may surpass 10 trillion won since they started bagging orders in 2010.

Despite the gloomy outlook, Daewoo Shipbuilding said it expects to see improvements in profitability from next year.

“Currently, Daewoo has the world’s largest backlog and premium vessels such as LNG and LPG ships account for 42 percent of them. In 2016, the profitability will get better as production of those ships will begin in earnest,” a company official said.

By Park Han-na (hnpark@heraldcorp.com)