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| Pedestrians walk past the logo of Doosan Group set up its head office in downtown Seoul, Monday. Yonhap |
By Kim Yoo-chul
In line with its ongoing restructuring efforts, Doosan Group is planning to abandon its management rights to a local university it acquired more than a decade ago, officials familiar with the matter said Monday.
"In a wide-scale restructuring plan Doosan submitted to its creditors, abandoning Chung-Ang University was included. It's a kind of the whole package deal because the group also plans to sell its construction affiliate Doosan E&C. Costs saved from the sale of the university could be used to by Doosan Group to raise the asking price for its stake in Doosan E&C," an official said on condition of anonymity.
Doosan acquired the university in 2008 following approval by the education ministry. At the time, the group said the move was in line with its pursuit of socially responsible management. Founded in 1918, the university is well-recognized for its competitiveness in fields such as theater, film, design and the liberal arts.
Doosan was looking for a buyer of the university, but its two main state creditors ― the Korea Development Bank (KDB) and Export-Import Bank of Korea (Eximbank) ― were looking at the additional benefits of a package deal.
The rapidly deteriorating profitability of Doosan E&C has been cited as the main cause behind the undermining of Doosan Heavy. Despite multiple attempts to sell the construction affiliate, no potential buyers have surfaced given the continued sluggish real estate market and possible "undiscovered" bad assets.
"Because Doosan E&C has the right to manage all construction projects at the university, a buyer that acquires the university will inherit all contracts Doosan signed with the school," another official said. From 2008 to 2018, the school signed 245 billion won worth of contracts with the group's construction affiliate under which Doosan E&C would handle development and maintenance of construction areas at the university, which also has a regional campus in Anseong, south of Seoul.
"Because Doosan Group has an exclusive management right with the university but then won't own the university, its sale won't be helpful in terms of cash inflow, but it will help the group save costs," an official at a Doosan creditor said. Doosan has been spending around 10 billion won annually on the university since its acquisition.
Various scenarios are under review to reorganize the group's business portfolio as it seeks to unload both non-core and core assets to avoid complete financial ruin.
