SEOUL-- Samsung Heavy Industries Co. said Tuesday that its shareholders approved a proposal to reduce its capital base in an effort to improve its financial status.

With the approval for 5-to-1 capital reduction, the face value of the shipbuilder's common shares and preferred shares will be cut from 5,000 won (US$4.40) to 1,000 won.

After the capital reduction, the shipbuilder's capital base will be reduced to 630 billion won from 3.15 trillion won, the company said.

The capital reduction will take effect on July 26, and new shares will be listed on the local market on Aug. 10, it said.

In May, Samsung Heavy said it plans to push for the capital reduction to put it in better shape.

The shipbuilder has been suffering an accumulated deficit of over 2 trillion won.

Samsung Heavy plans to decide on its plan to sell new shares to raise nearly 1 trillion won at its board meeting slated for next month.

Source: Yonhap News Agency